The RBA kept rates unchanged, but the message from the central bank remains firmly in the hold-or-hike camp. Rate cuts are not currently part of the discussion, and the next move could still be higher if inflation and cost pressures fail to ease. That more hawkish stance has ultimately helped support the AUDUSD today.
The initial reaction to the RBA decision was relatively muted, with the AUDUSD actually moving lower after the announcement. The price fell back below both the 100-day and 100-hour moving averages near 0.7052 and reached a session low of 0.7041.
However, sellers could not maintain the downside momentum.
Buyers returned and pushed the price back above both the 100-hour and 100-day moving averages. That shift helped propel the pair to a new session high of 0.7068, and solidify the 100 day moving average as a key support level once again. Staying above keeps buyers and control.
The rebound puts the focus back on an important topside target at the 50% midpoint of the move down from the May 5 high to the late-June low at 0.70707. There are certainly a lot of sevens and zeros in that level, but technically it is an important barometer for buyers and sellers.
The price moved above that midpoint on Friday and again yesterday, only to quickly rotate back to the downside on both occasions. As a result, getting above 0.70707 — and staying above it — would be an important technical step and could be the catalyst for additional upside momentum.
Just above that level sits Friday’s high at 0.7077. A break above both 0.70707 and 0.7077 would open the door toward the next swing area between 0.7100 and 0.7113. Beyond that, the 61.8% retracement of the decline from the May high comes in at 0.7119.
For now, the buyers have the advantage with the price back above the 100-day moving average. It would take a move back below that moving average to give the sellers more hope. More downside control would come on a break below the rising 200-hour moving average at 0.7036.
Bottom line: Buyers are in control following the post-RBA rebound. Get above the 50% midpoint at 0.70707 and Friday’s high at 0.7077, and traders can start looking for the next upside push toward 0.7100–0.7119. Move back below the 100-day moving average, and the bullish technical bias starts to weaken.
This article was written by Greg Michalowski at investinglive.com.
