AUD/USD Price Forecast: Looks like there is a bullish reversal

The Australian Dollar (AUD) has continued its upward trend against the US Dollar (USD), increasing by 0.26% to around 0.7015 in early European trading. Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser cautioned that the inflation outlook is worse than initially forecast and slightly higher than expected. Despite this, AUD remains the strongest against the New Zealand Dollar.

The RBA's warning about sustained elevated price pressures may lead to another interest rate increase by the central bank in the near term. Meanwhile, the US Dollar is trading cautiously as the Federal Reserve (Fed) remains in a blackout period ahead of a policy decision later this month. Analysts anticipate the Fed will keep interest rates unchanged in the range of 3.75%-4.00%.

On the AUD/USD daily chart, the pair is trading near the 20-period exponential moving average (EMA) at 0.6995, indicating a mildly positive near-term outlook. Support is provided by two upward-sloping trend lines at 0.6904 and 0.6903, while the Relative Strength Index (14) at 50.96 suggests balanced momentum. The immediate resistance level is at 0.7020, with a more significant barrier at 0.7138.

If inflation continues to rise, central banks may raise interest rates, strengthening the AUD as investors seek lucrative places to store their money due to relaxed cross-border capital controls.