The AUDUSD faced initial pressure after the Reserve Bank of Australia’s rate decision, falling below the 200-hour moving average at 0.6487. However, the decline reversed as buying interest emerged, lifting the pair.
Volatility from the US CPI report increased the pair up to the 100-hour moving average at 0.65138, where it temporarily met resistance, retreating to 0.6490. This pullback was short, with buyers regaining control, surpassing the 100-hour moving average, and pushing the pair higher amid US dollar selling.
Potential Bullish Outlook
The surge brought the AUDUSD close to last week’s high at 0.6541, peaking today at 0.65392. The next resistance level is at 0.65455, aligned with the 61.8% retracement from the July 24 decline. Breaching this could confirm a bullish outlook and target further retracement zones.
Key Technical Levels include resistance at 0.6541 and 0.65455, with support at 0.6521, 0.65138, and 0.6487. A position above 0.65138 suggests a bullish trend, potentially aiming for 0.65455. Conversely, dropping below 0.65138 may see sellers revisit 0.6487 and the 200-hour moving average.
We saw the AUD/USD quickly bounce back after the Reserve Bank of Australia’s rate cut earlier this month. The dip below the 200-hour moving average did not last, showing strong underlying buying interest. Now, the pair is testing highs from last week, pressing against significant resistance.
US Dollar Influence
The main driver for this move appears to be US dollar weakness following the latest Consumer Price Index report. July’s inflation data came in at 2.9%, which was softer than the market anticipated and has fueled bets that the Federal Reserve will pause its own rate adjustments. We are seeing this reflected in Fed fund futures, which now suggest a reduced likelihood of a hike at the September meeting.
On our side, the Australian dollar is finding support from solid fundamentals despite the RBA’s recent action. The latest jobs report for July showed the unemployment rate holding firm at 3.9%, beating expectations and suggesting economic resilience. Rising iron ore prices, which have climbed back over $110 per tonne on renewed Chinese demand, are also providing a tailwind.
For derivative traders, the focus in the coming weeks should be on the 0.65455 level. A sustained break above this price could be a signal to consider buying call options, as it would suggest a new bullish leg is underway. This move would target higher resistance zones not seen since late July.
Conversely, if the pair fails to break above 0.65455 and retreats below the 0.65138 area, it would indicate that buying momentum is fading. In this scenario, traders might look at buying put options to hedge against a decline back toward the 200-hour moving average around 0.6487. Volatility is likely to remain elevated, so managing risk around these key technical points is critical.
