AUD/NZD Rebounds from Support Following RBA Policy Decision

The AUD/NZD cross recently found support around the 1.0600 area after the Reserve Bank of Australia (RBA) announced its policy decision, sparking a reversal of previous losses. Currently trading near the 1.0640 region within a range-bound area, traders may consider long positions at discounted prices.

The Australian Dollar (AUD) exhibited strength across multiple fronts following the RBA's decision to maintain the Official Cash Rate and uphold a hawkish stance. The central bank emphasized the need for confidence in inflation sustainability towards the target range. In its policy statement, the RBA acknowledged easing inflation in the December quarter, albeit remaining high at 4.1%. Notably, services price inflation showed a gradual decline but remained elevated.

Additionally, the RBA released updated economic forecasts for 2024 and 2025, revealing slight downward revisions in GDP and consumer inflation expectations. Economic growth for 2024 is now projected at 1.8%, with CPI forecasted at 3.2%, down from initial estimates of 2.0% and 3.5%, respectively. The favorable inflation outlook suggests the conclusion of the RBA's tightening cycle, potentially paving the way for future rate cuts.

While the AUD/NZD cross shows signs of rebounding from the demand area within the range box, traders eye buying opportunities at discounted prices. However, the prospect of a downward shift in the RBA's monetary policy stance may act as a hindrance to significant AUD gains, potentially capping further upside for the AUD/NZD pair.

Above 1.0500 look for further upside with1.08000 and 1.09500 as targets.

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