As the RBA approaches amid China’s lockdowns, the AUD/USD chart shows bullish potential

 

The Asian markets will start the week with an eye on Australia’s interest rate announcement tomorrow. The Reserve Bank of Australia (RBA) is likely to maintain its current interest rate of 0.1 percent, although expectations for a raise in the second half of the year have grown in recent weeks. As a result of these predictions, Australia’s 10-year bond yield has risen over 100 basis points in only four weeks. It’s presently trading at little under 3.0%, its highest level since May 2018.

Although economists are divided on when the RBA would raise rates for the first time in more than a decade, the majority believe it will happen in June, July, or August. The Australian Dollar has benefited from these hawkish sentiments, with the currency rising higher against its main counterparts in March. The 2022 Australian federal election, which is slated to take place in May, complicates forecasting a rate rise. So close to an election, RBA Governor Lowe may prefer to leave rates unchanged. The Melbourne Institute’s March inflation measure will be released this morning, followed by ANZ Bank’s final report on February retail sales and March job adverts. A strong performance in those data prints might aid in the strengthening of the Australian Dollar. India will release manufacturing PMI data for March later today, while Thailand will release business confidence data for the same month.

As the situation in Ukraine rages and war crimes claims mount, crude oil prices are certain to continue under constant scrutiny. Despite the limits, the current Covid outbreak in China has shut down Shanghai, a key financial Centre, and instances are continuously growing. Extended limitations may start to have a toll on China’s stock market, especially as the rest of the world starts to ease restrictions. With last week’s news of a supply release from US strategic reserves, demand-sensitive oil prices fell.

Following many weeks of advances, the AUD/USD pair stabilised last week. This movement has resulted in the formation of a Bull Flag pattern, which might signal additional advances. Prices might rise to new 2022 highs if they break over flag resistance. The 0.7556 top from October 2021 might function as resistance. A break below Flag support, on the other hand, might bring the 78.6 percent Fibonacci level at 0.7430 into focus. Following that is the 61.8 percent Fib at 0.7331.