AUDUSD Trade Idea

The Aussie has managed to avoid the higher risk aversion as the commodity complex remains robust providing a shock absorber for AUD. We had the RBA meeting overnight. The main conclusion to take away is - it’s all about wage growth for the RBA in terms of what’s needed for movement in terms of policy. Muted wage growth provides the RBA with the rationale for a more patient approach, despite energy price rises boosting inflationary pressures temporarily. The RBA believe wage pressures aren’t too strong and is still not at a level considered to be consistent with inflation being sustainably at target (2-3%). Post the meeting money markets priced out some of their tightening expectations. The first hike is expected to take place in August with a 60% chance for July. 85% probability of 2 hikes by September.

(Source: Tradingview - Past performance is not indicative of future performance.)

The technicals are at an interesting inflection point. Price came very close to the 0.73 resistance level as well as the downtrend line. Just above there is the 200-day SMA. The RSI is also at a key area, 60.55 as seen on the charts. Above the 200-day SMA is the 61.8% Fibonacci level. For a dip lower in price watch the 38.2% Fibonacci level which aligns with the 50-day SMA and 21-day EMA. Maybe AUDUSD trades in a range bounded by the 0.73 and 0.7 level if price doesn't have enough momentum to decisively break above 0.73.