AUDUSD might be ready to resume its selloff, as the pair is finding resistance at the top of its falling channel on the 1-hour chart. Price could head back to the bottom of the range at the .7300 major psychological level or until the recent lows at .7350.
Stochastic confirms that the downtrend could carry on since the indicator is heading down. However it has just reached the oversold region and might draw some buyers back in. RSI is on the move lower, confirming also that selling pressure is still present and that the path of least resistance is to the downside.
Meanwhile, the 100 SMA is below the 200 SMA, which is currently holding as a dynamic resistance for price action. A break past this area could signal that a longer-term correction is underway or that a reversal is starting to take place.
AUDUSD Fundamental Factors
Earlier today, Australia showed that its quarterly CPI came in at 0.7%, slightly below expectations of a 0.8% gain but an improvement from the previous period’s small uptick. This could mean lower odds of a rate cut from the RBA, even as its other comdoll peers such as the RBNZ and BOC are susceptible to easing.
Nonetheless the recently released RBA minutes showed that the central bank is still getting more concerned about falling commodity prices, particularly that of iron ore. This could wind up dragging trade volumes and revenues much lower in the coming months, which explains why they’d like to see further declines in the Aussie.
In contrast, the US economy still seems to be doing quite well, keeping the Fed on track to hiking interest rates sometime this year. Even Fed Chairperson Yellen has expressed confidence in the economy, citing recent improvements in hiring and inflation. Apart from that, risk aversion in the markets could keep the safe-haven US dollar supported.
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