The Australian dollar is declining for the second consecutive day. The AUDUSD pair is returning to fluctuations within the traded range.
AUDUSD trading key points
- AUDUSD targets: 0.6555, 0.6750
- The odds of an RBA interest rate hike in August are one in three
AUDUSD fundamental analysis
The AUDUSD pair declines to 0.6638 on Tuesday, retreating from a two-week high despite the recent hints from the Reserve Bank of Australia about a potential interest rate increase.
According to the RBA’s June meeting minutes, monetary policymakers prefer to remain vigilant about inflation risks. They believe that significant price rises may necessitate a noticeable rate hike. However, the RBA is confident it can bring inflation down to the 2% target while maintaining economic and employment stability.
Investors estimate a one-in-three chance of an RBA interest rate hike at its August meeting.
On a global level, the Aussie is under pressure from the US dollar due to increased treasury bond yields.
AUDUSD technical analysis
On the H4 chart, the AUDUSD pair has formed a consolidation range above 0.6630 and, after breaking above it, extended the range to 0.6677. Subsequently, the quotes returned to the 0.6633 level, crucial for the AUDUSD forecast for 2 July 2024. A downward breakout will open the potential for a decline in the AUDUSD rate to 0.6555, representing the estimated target.
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Summary
The Aussie is under pressure from the USD due to increased treasury bond yields. The AUDUSD technical analysis points to a further correction towards 0.6555.