AUD/USD Gains Momentum Following RBA Governor's RemarksThe AUD/USD pair is gaining traction after the Reserve Bank of Australia (RBA) Governor Michele Bullock indicated on Wednesday that the central bank is prepared to raise interest rates if the Consumer Price Index (CPI) does not return to the target range of 1%-3%, as reported by NCA NewsWire. This hawkish stance has provided a boost to the Australian Dollar, reflecting increased market confidence in the currency.
Technical Analysis Overview
From a technical perspective, the price action on Tuesday saw the AUD/USD pair touch and rebound from the 61.8% Fibonacci retracement level, initiating an initial bullish impulse. However, this upward movement was reabsorbed during the day. Today, we are looking to buy on dips, anticipating another bullish impulse.
On the H4 chart, a divergence has been observed, reinforcing our bullish bias. This technical indicator suggests that despite some retracement, the overall trend remains positive, and the market may be poised for further gains.
Key Factors Influencing AUD/USD
1. RBA Governor's Statement: Michele Bullock's remarks have underscored the RBA's readiness to adjust interest rates to control inflation, providing a strong bullish signal for the AUD.
2. CPI Concerns: The emphasis on the CPI returning to the 1%-3% target range highlights the RBA's commitment to price stability, further influencing market expectations regarding future monetary policy adjustments.
Market Strategy
Given the current technical setup and the fundamental backdrop, our strategy involves looking to buy on dips. The rebound from the 61.8% Fibonacci level and the observed divergence on the H4 chart support this approach. We anticipate that any pullbacks will provide buying opportunities, with the expectation of a renewed bullish impulse.
Conclusion
The AUD/USD pair is showing positive momentum following the RBA Governor's comments about potential interest rate hikes if inflation targets are not met. From a technical standpoint, the pair's behavior around the 61.8% Fibonacci retracement level and the divergence on the H4 chart support a bullish outlook. As a result, the current market environment presents an opportunity to buy on dips, positioning for another bullish move in the AUD/USD pair.