Is the Aussie Dollar a buy amid the Australian reopening plans?
- The AUD/USD pair has held steady in the past few days.
- It is reacting to the latest business confidence data.
- Confidence will keep rising as Australia reopens its borders.
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The AUD/USD price held steady on Monday morning after the latest Australian business confidence data. It is trading at 0.7127, which is slightly above last week’s low at 0.7053.
Australia business confidence
The pair rose slightly as investors focused on the latest business confidence data. According to the National Association of Business (NAB) showed that business confidence rose from -12 to 3.
This trend will likely continue considering that the Australian government announced that it will reopen its borders to foreign travelers starting from February 24th.
The reopening is expected to be a boom for the Australian economy, especially the closely watched services sector. In the past two years, many firms in the sector like hotels, restaurants, and tourist destinations have been under intense pressure.
Meanwhile, data published on Monday showed that the services sector did well in January this year. The services PMI number by Australia’s Industry Group rose from the contraction level of 48 to about 52 in January. Therefore, the reopening process will only supercharge the recovery.
Most importantly, the AUD/USD is reacting to the outlook of the Reserve Bank of Australia (RBA) when the reopening happens. In its decision last week, the RBA left its main interest rate unchanged and ended its quantitative easing (QE) policy.
At the same time, the RBA chair hinted that the RBA will likely start hiking interest rates later this year. In its previous meetings, the bank hinted that it will hike rates in 2023 or 2024.
The four-hour chart shows that the AUD/USD pair has been in a strong bullish trend in the past few days. Along the way, the pair has moved slightly above the 25-day and 50-day moving averages. A closer look shows that the pair has formed an inverted head and shoulders pattern.
Therefore, there is a likelihood that the pair will keep rising as bulls target the next key resistance at 0.7200. The support level at this point will be at 0.7080.