Powell Flags Two More Rate Hikes

• The dollar rose mainly on Fed Chairman Powell’s hawkish remarks.

• Fed Chair Powell suggested further rate hikes may be needed to keep inflation under control.

• A series of global rate hikes has spooked investors and led to a scramble for dollar safety.

The weekly outlook for the AUD/USD is bearish as the dollar continues to rise on the back of the hawkish Fed. The Fed chairman hinted at two more rate hikes.

AUD/USD up and down

AUD/USD had a bearish week mainly due to the strong dollar. Australia was at the mercy of the dollar as there were no major economic announcements from Australia. The dollar rose largely due to Fed Chairman Jerome Powell’s hawkish remarks in congressional testimony.

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US dollar and Treasury yields rose after Federal Reserve Chair Jerome Powell suggested that more US interest rate hikes might be needed to keep inflation under control.

Moreover, a series of global interest rate hikes has spooked investors and led to a scramble for dollar safety. There were concerns that these rate hikes would lead to a recession.

Major AUD/USD Events Next Week

Next week, the US and Australia will release some important reports, which could lead to volatility in the currency pair. The more important reports include US GDP and core PCE data, Australian retail sales data.

In particular, GDP data reveals the presence or absence of US economic growth and assesses the impact of high interest rates on the economy. Meanwhile, the Core PCE report plays an important role as the key metric the Fed employs to assess inflation.

Finally, Australian retail sales data provide a picture of consumer spending in the country. In addition, it will inform the RBA of the next policy move.

AUD/USD Weekly Technical Outlook: A 22-SMA puncture could lead to a bear market.

AUD/USD has broken out of the 22-SMA and 0.6700 support on the daily chart after a sharp move by the sellers. This happened after the price reversed at the 0.6900 resistance level. At the same time, the RSI has broken below 50, indicating a possible turn to bearish sentiment.

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If the price refuses to break below these support levels next week, the price will move higher. However, if the bear market remains strong, the next target will continue the bearish move towards the 0.6502 support level. A break below 0.6502 is necessary for the bears to cut lower lows and highs to confirm a bearish trend.

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