The Australian dollar (AUD/USD) is up for the third straight day as investors react to the latest Reserve Bank of Australia (RBA) interest rate decision. The pair rose to a high of 0.7570, which was 1.75% above the lowest level last week.
RBA interest rate decision
The RBA concluded its two-day monetary policy meeting on Tuesday. The Philip Lowe-led bank decided to leave the interest rate unchanged at 0.10%. It also maintained the interest rate on exchange settlement balances at zero per cent.
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Further, the RBA decided to retain its yield curve control intact. The bank aims to maintain the yield of the April 2024 bond at 10 basis points. Before the meeting, some analysts were expecting the bank to move from the April 2024 bond to September.
Meanwhile, the RBA will continue with its quantitative easing program. It will reduce the amount of bonds bought to $4 billion a week until at least mid-November. The bank said:
“These measures will provide the continuing monetary support that the economy needs as it transitions from the recovery phase to the expansion phase. The Board is committed to achieving the goals of full employment and inflation consistent with the target.”
The RBA expects that inflation will rise to 1.5% in 2021 and to reach 2% by next year. It also expects that inflation will rise temporarily to above 3.5%. It also expects the labour market to keep tightening.
The RBA decision came at a time when there are concerns about the Delta variant of coronavirus in Australia. In fact, some states have started adding some restrictions to curb the spread. Still, the economy is doing well as evidenced by the strong manufacturing and services PMI numbers.
AUD/USD technical analysis
The four-hour chart shows that the AUD/USD pair declined to 0.7445 last week. It then resumed the bullish trend and is now trading at 0.7570. It has moved above the 25-day moving average and the Ichimoku cloud. The signal and main lines of the MACD have moved above the neutral line.
The pair has also formed a double-bottom pattern whose neckline is at 0.7618. Therefore, the pair will likely keep rising as bulls target this neckline. This prediction will be invalidated if it moves below the support at 0.7500.
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