- AUD/USD gained traction for the second straight day after the RBA announced its policy decision.
- Overbought RSI on the 1-hour chart, bearish oscillators on the daily chart warrant caution for bulls.
- A sustained strength beyond the 0.7120 area is needed to confirm that the pair has bottomed out.
The AUD/USD pair built on the previous day's goodish rebound from sub-0.7000 levels, or the lowest level since November 2020 and gained traction for the second successive day on Tuesday. The prevalent risk-on mood in the markets turned out to be a key factor that continued acting as a tailwind for the perceived riskier Australian dollar.
The buying interest picked up pace after the Reserve Bank of Australia announced its policy decision and kept the official rate on hold at the historic low level of 0.10%. In the accompanying statement, the RBA hinted that bond-buying will end in February, which sets the stage for a hike in July and provided a modest lift to the aussie.
The momentum pushed the AUD/USD pair to a two-day high, around the 0.7085 region, and 100-hour SMA, paving the way for a further near-term appreciating move. That said, RSI on the 1-hour chart is already flashing overbought conditions and technical indicators on the daily chart are still holding deep in the bearish territory.
Hence, any subsequent move up is more likely to confront stiff resistance and meet with a fresh supply near the 0.7100 round-figure mark. This, in turn, should cap the upside near the 0.7120 region, which should act as a key pivotal point for the AUD/USD pair. A sustained strength beyond will negate the bearish bias and trigger a short-covering move.
The AUD/USD pair might then accelerate the momentum towards testing the next relevant hurdle near the 0.7170-75 region before aiming to reclaim the 0.7200 round-figure mark.
On the flip side, the daily swing low, around the 0.7040 region, now seems to protect the immediate downside. Any further downfall might continue to find decent support near the key 0.7000 psychological mark. A convincing breakthrough the latter will be seen as a fresh trigger for bearish traders and prompt aggressive technical selling.
The next relevant support is pegged near the 0.6930 region before the AUD/USD pair eventually drops to test the 0.6900 mark. Some follow-through selling has the potential to drag the pair further towards the 0.6800 mark en-route the 0.6765-60 region in the near term.
AUD/USD 1-hour chart
Key technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.