Boost from the RBA: The Reserve Bank of Australia (RBA) held its official cash rate at the historic low of 2.00%. Despite slow growth, the RBA is reluctant to cut rates further. Glenn Stevens and the bank is in a wait-and-see mode. (Official RBA Statement).
Because the RBA seems to have turned the corner from the dovish policy stance to a more neutral one, traders are keeping the Aussie afloat.
Flag Breakout: AUD/NZD ended last week with a bullish breakout form a flag pattern. It held under 1.08 at the start of the week, but also found support at 1.07. Then, after the RBA statement, traders pushed the pair above 1.08, putting pressure back on the 1.0890 high.
Next Resistance: the daily chart, we can see that the current rally has the 1.0918-1.0983 area in sight. This area represents the support of a price top formed from August through November 2014.
AU/USD in a Bullish Breakout:
The AUD/USD has been in a bearish channel since mid-May after making a high at 0.8163. After the RBA statement, the AUD/USD broke above the falling channel and the 50-period SMA. 0.7840-0.7863 is a the next resistance in the short-term.
The 0.7840-0.7863 area also involves the 100- and 200-period SMAs. A break above 0.7865 would neutralize the bearish outlook, but for now, the current rally is still within the medium-term bearish outlook.
False Bullish Breakout: Actually, the medium-term trend has shifted from bearish to neutral. But after a failse breakout in April and May, the AUD/USD is now neutral-bearish with emphasis on the bearish component because of the price action in the second half of May.
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