AUD/USD analysis: filling the gap ahead of RBA
|AUD/USD Current price: 0.7350
- Aussie rallied on relief after US-China truce on trade, new negotiations coming.
- The Reserve Bank of Australia is having its monetary policy meeting this Tuesday, focus on the statement.
The Australian dollar set a fresh 3-month high against the greenback, gapping higher with the weekly opening and with the pair trading as high as 0.7392 on the back of news indicating that the US and China agreed on a truce on their trade war. Both economies have compromised to conduct talks, aimed to reduce tensions. The pair was underpinned by a strong rally in worldwide indexes, although US indexes retraced from their early peaks ahead of the lows, backing a proportional retracement in the AUD/USD pair, which heads into the Asian opening around its daily low.
During the upcoming Asian session, the RBA will have a monetary policy meeting, although no changes are expected. Rates have been at a record low of 1.5% for over two years and market participants aren't waiting for a move until late 2019 the earliest. Attention will focus on the accompanying statement, and whether the wording flipped in a particular direction. Confident policymakers could boost the pair through the 0.7400 figure.
From a technical point of view, the weekly opening gap remains unfilled but with the pair now at daily lows, it seems likely it could do so before resuming its advance. Friday's close at 0.7313 is, therefore, the immediate support, and as long as the level holds, the downside will look limited. In the 4 hours chart, the 20 SMA keeps advancing above the larger ones, while technical indicators eased alongside the price, maintaining their downward slopes within positive ground. The pair could fall through the mentioned support on a dovish RBA but will need to extend its decline below 0.7250, a strong static mid-term support, to lose the positive tone.
Support levels: 0.7315 0.7280 0.7250
Resistance levels: 0.7385 0.7420 0.7455
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