AUD/USD finally set for a rally towards 0.80?

Once again, the AUD/USD is back, banging its head against the ceiling around that 0.7730-80 resistance range. Relative to other major currencies, though, the Aussie has performed rather well in recent times. So, it may finally clear this resistance zone at the umpteenth time of asking. Part of the reason for a strong Aussie in recent times has been the relatively stable metal prices. The other reason has been the Reserve Bank of Australia. The RBA has dropped its dovish stance somewhat decisively and is now neutral to slightly hawkish. The bank's last meeting minutes will be published overnight. If they convey unexpectedly strong hawkish tone then expect the AUD to appreciate further. Since the RBA's last policy decision on March 7, economic data in the economy has been mixed. The seasonally adjusted estimates of employment figures were disappointing for the month February as total employment decreased and unemployment rate rose. However the fall in total employment was due to a sharp drop in part-time employment, while full-time employment actually rose by a good 27,100. Meanwhile inflation expectations fell slightly to 4.0% from 4.1%, according to the Melbourne Institute. So, the Australian economy hasn't done too badly. Once inflation starts to rise more rapidly in Australia then the RBA may have to start tightening its belt. The AUD/USD could also appreciate if the US dollar continues to remain in its current correction mode.

Regardless of the long-term fundamental outlook, we could get a short term technical breakout anyway. The reason is that with this 0.7730-80 area consistently offering resistance, it has become too obvious. I imagine there to be lots of protective buy stop orders from the sellers stacking above this zone. The cluster of buy stop orders there may act like a magnet and pull price towards it. If triggered, it could send the Aussie surging higher, for then breakout traders may also come into play.

Consequently, there is a strong possibility – in my view, anyway – that the Aussie could break higher soon and climb towards the 0.80 handle. The progressively higher lows suggests that the selling pressure may in fact be waning. That being said, it would not come as a surprise to me if we were to see yet another rejection of the bulls' advance here, at least a temporary one like the last time. However, should the last swing low at around 0.75 break down then this bullish outlook would obviously become invalid. In this potential scenario we may see the start of a much dropper correction. There is also a possibility for a short-term drop towards 0.7575 if immediate support at 0.7665 gives way.

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