The Reserve Bank of Australia released its latest meeting minutes, which expressed concerns of a messy economic recovery that has been dependent in part to China’s economy, which has become uncertain. The RBA will have to consider going back to stimulus measures. The dovish minutes pressured the Aussie across the board. Let’s take a look at AUD/USD, AUD/JPY, and AUD/NZD.
AUD/USD has been bullish in June rallying from about 0.9210 to 0.9437 before it retreated. The market was not ready to challenge the 0.9460 high on the year. The RBA meeting minutes extended last week’s bearish correction, and price sits just above 0.9340 as we get ready for the 6/17 US session. The 0.9330 area will be key support. For you Elliot Wave practitioners out there, it would allow you to see a motive wave development. If price can hold above 0.9330, we should maintain bullish outlook toward the 0.9460, 2014-high.
(AUDUSD 4H Chart, 6/17)
In the 4H chart, another clue to look for is the RSI and moving averages. If the RSI can stay above 40, it would reflect maintenance of the bullish momentum developing in June. Also, around 0.9320, there is the 200- and 100-4H simple moving averages. A break below these factors and the rising June trendline would suggest bearish continuation.
AUD/JPY is in a similar set up as the AUD/USD. It has been bullish in June and was about to challenge the 2014-high at 96.50. Traders sold the AUD/JPY after the the dovish RBA minutes. Price action reflects a rounded top in the 4H chart. However traders during the 6/17 US session will see the pair being supported by a rising trendline that goes back to late May. A hold above the trendline should be a sign of bullish continuation. A break below 95.00 should be a sign of further consolidation below the 2014-high, and suggest some short-term bearish outlook toward the support pivots at 93.68 and 93.04.
(AUD/JPY 4H chart, 6/17)
AUD/NZD has been dominated by NZD-strength in June, as the RBNZ continued its rate hiking campaign for a 3rd straight meeting. The 4H chart shows a pair that has broken below the moving averages (200, 100, 50), and a rising trendline coming up from early May. While traders might consider buying on a dip in AUD/USD and AUD/JPY, the AUD/NZD offers a sell on a rally outlook.
(AUD/NZD 4H chart, 6/17)
The RBA reaction extended AUD/NZD’s decline, but it is developing a bullish divergence with the RSI. If there is a pullback, look for resistance around 1.0870-80 area. Price should not push above 1.0925 in a bearish scenario. Also look for the RSI to hold at 60. That could be a clue that a bullish correction is over, and the market is ready for a bearish continuation attempt with the 1.0750 and 1.0650 lows in sight.
The AUD/USD and AUD/JPY still looks strong, but upside is limited for both to their respective 2014-highs. In the short-term, AUD/USD has key support at 0.9330 and AUD/JPY has key support at 95.0
The AUD/NZD however looks heavy, and could be returning toward the 2014-lows around 1.05. but a break back above 1.0925 could be a sign of bullish reversal.
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