The AUDUSD moved lower earlier in the Asia-Pacific session today, but found willing buyers just ahead of the rising 200-day moving average at 0.68599. The session low reached 0.68655, and the pair’s inability to break below that key support level gave buyers the green light to push prices higher.
That rebound gathered momentum during the North American session, with the pair breaking above the 100-hour moving average at 0.6893. Both yesterday and on Friday, rallies stalled at that moving average as sellers leaned against the level. Today’s break above it has led to increased upside momentum, with the price now testing last Thursday’s high at 0.69278.
The next key resistance level comes in at the falling 200-hour moving average at 0.69367. If buyers are to seize greater control, they need to get above and stay above that level and then extend through the 38.2% retracement of the decline from the mid-June high to today’s low, which comes in at 0.69503.
Absent a move above those levels, the current rally should still be viewed as a normal correction within the broader downtrend. Buyers need to show they can wrestle control from the sellers.
From a longer-term perspective, AUDUSD has been trending lower since peaking near 0.7277 in early May. The decline to today’s low of 0.68655 amounts to a drop of more than 400 pips in less than two months, underscoring the significance of the current rebound and the importance of the resistance levels directly ahead.
The RBA meeting minutes were released earlier today. Those minutes were from the last meeting on June 16. The RBA at that meeting kept rates unchanged after 3 previous hikes which took the price back to the prior high. The Reserve Bank of Australia maintained a hawkish bias, emphasizing that monetary policy needs to remain restrictive and that further rate hikes remain possible if inflation proves persistent. The board highlighted that headline inflation at 4.0% and core inflation at 3.6% remain well above its 2%-3% target range, while excess demand in the economy and weak productivity growth continue to pose risks to the inflation outlook. Policymakers also noted that the housing market has softened more than expected, with falling home prices in Sydney and Melbourne presenting a downside risk to growth.
The minutes, however, predated last week’s more than 10% decline in Brent crude prices, creating a disconnect between the RBA’s hawkish tone and market expectations. Investors now see only limited scope for further tightening and have begun pricing in modest rate cuts through 2027, reflecting the view that lower energy prices could ease inflation pressures and that Australian interest rates may have already peaked.
This article was written by Greg Michalowski at investinglive.com.
