• AUD/USD has fallen back to 200-hour moving average (200-HMA), having faced rejection at the 21-day MA earlier today.
  • A break above Monday's high is needed to confirm a bullish reversal.
  • AUD could pick up a bid if RBA's Debelle downplays the need for QE.

The AUD/USD pair is currently trading around the 200-hour moving average of 0.6770, having faced rejection at the 21-day moving average at 0.6781 in the early Asian session.

0.6788 is the level to beat for the bulls

AUD/USD dropped to 0.6689 during the Asian trading hours on Monday before ending the day with gains of 0.6775. Essentially, the pair created a daily candle with a long-tail, indicating seller exhaustion below 0.67.

A long-tailed candle is considered a sign of impending bearish-to-bullish trend change if it appears following a notable sell-off. The trend change, however, is confirmed only if the follow-through is positive.

Hence, a close above Monday's high of 0.6788 is needed to confirm a bullish reversal.

Focus on Debelle speech

The Reserve Bank of Australia's Deputy Governor Guy Debelle is scheduled to speak at 02:50 GMT today.

The AUD will likely pick up a strong bid and rise above 0.6788 if Debelle downplays the need for unconventional monetary policy in Australia. Markets are increasingly speculating that the RBA would soon hit the zero lower bound and would implement negative rates and quantitative easing.

A bullish break, however, could remain elusive if Debelle talks QE and negative rates. The AUD may also come under pressure if the equities remain risk-averse. As of writing, the futures on the S&P 500 are flatlined.

Pivot levels

    1. R3 0.6914
    2. R2 0.6851
    3. R1 0.6814
  1. PP 0.6751
    1. S1 0.6714
    2. S2 0.6651
    3. S3 0.6614

 

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