Looking ahead into February 2023 (AUD)
Throughout the month of January, the AUDUSD traded consistently higher within a bullish channel, after bouncing off the 0.67 round number support level, at the start of the year.
While the move higher was primarily driven by the weakness in the DXY, 2 CPI y/y data releases (inflation growth indicator) and no Reserve Bank of Australia (RBA) interest rate decision provided additional stimulus to the climb higher.
On the 11th of January, the CPI y/y data was released at 7.3% (Forecasted: 7.2% Previous 6.9%). The release of higher than previous data showed that inflation was still growing in Australia for the month of December, despite the RBA's approach of consistently hiking interest rates, to the current rate of 3.10%. Price reacted positively as it bounced off the 0.6870 level to trade higher.
Again on the 25th of January, the CPI y/y data was released at 8.4% (Forecast: 7.6% Previous: 7.3%), this time for the month of January. Continual inflation growth, signaled to the market to increase bets for further rate hikes to come from the RBA. This time, the price broke through the 0.7045 previous swing-high and near-term resistance to trade strongly to the upside, testing the 0.7140 resistance area (last reached in August 2022).
So, where could the AUD move to in February?
The next directional movement of the AUDUSD will be highly dependent on the outcome of the US Federal Reserve interest rate decision on 2nd February. (read the DXY analysis in the link below)
Anticipating some downside potential on the AUDUSD, if the US Federal Reserve raises rates without making a comment regarding a slowdown/pivot. The AUDUSD could break out of the current bullish channel to trade down to the 0.6870 price level.
On the 7th of February, the RBA is due to release its interest rate decision, with current rates at 3.10%, the market expectation is for another rate hike of 25bps.
It would be crucial to pay attention to the accompanying statement for hints regarding further rate hikes in 2023. However, the statement would most likely be in the tone of "future rate hikes will be data dependent, with an expectation for further inflation growth in the near term."
Read my previous write up regarding the RBA interest rate decision. Price tends to fall following the release of a rate hike. Is this going to happen again for the AUDUSD in February?
If the price breaks down from the bullish channel the next support level is at the 0.6870 level. Beyond the immediate resistance level of 0.7140, the next key resistance level is at the 0.73 price area.
While the move higher was primarily driven by the weakness in the DXY, 2 CPI y/y data releases (inflation growth indicator) and no Reserve Bank of Australia (RBA) interest rate decision provided additional stimulus to the climb higher.
On the 11th of January, the CPI y/y data was released at 7.3% (Forecasted: 7.2% Previous 6.9%). The release of higher than previous data showed that inflation was still growing in Australia for the month of December, despite the RBA's approach of consistently hiking interest rates, to the current rate of 3.10%. Price reacted positively as it bounced off the 0.6870 level to trade higher.
Again on the 25th of January, the CPI y/y data was released at 8.4% (Forecast: 7.6% Previous: 7.3%), this time for the month of January. Continual inflation growth, signaled to the market to increase bets for further rate hikes to come from the RBA. This time, the price broke through the 0.7045 previous swing-high and near-term resistance to trade strongly to the upside, testing the 0.7140 resistance area (last reached in August 2022).
So, where could the AUD move to in February?
The next directional movement of the AUDUSD will be highly dependent on the outcome of the US Federal Reserve interest rate decision on 2nd February. (read the DXY analysis in the link below)
Anticipating some downside potential on the AUDUSD, if the US Federal Reserve raises rates without making a comment regarding a slowdown/pivot. The AUDUSD could break out of the current bullish channel to trade down to the 0.6870 price level.
On the 7th of February, the RBA is due to release its interest rate decision, with current rates at 3.10%, the market expectation is for another rate hike of 25bps.
It would be crucial to pay attention to the accompanying statement for hints regarding further rate hikes in 2023. However, the statement would most likely be in the tone of "future rate hikes will be data dependent, with an expectation for further inflation growth in the near term."
Read my previous write up regarding the RBA interest rate decision. Price tends to fall following the release of a rate hike. Is this going to happen again for the AUDUSD in February?
If the price breaks down from the bullish channel the next support level is at the 0.6870 level. Beyond the immediate resistance level of 0.7140, the next key resistance level is at the 0.73 price area.
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However, in the accompanying statement, the board indicated that further rate increases could be expected.
This caused the AUDUSD to bounce strongly from the support level of 0.6870, up to the 0.6950 price level. While further upside could be anticipated, the downward pressure is likely to continue, limiting significant upside potential.