On the daily chart below, we can see that the price is trending downwards in a clean way. The blue short period moving average has been acting as resistance which is a sign of a strong selling momentum. The sellers will have the red long period moving average and the trendline as resistance in case the price pulls back.
As of now, the sellers are in control and it looks like we will have a test of the 0.6629 support soon. The RBA today delivered a dovish hike which should give the US Dollar another tailwind as the market looks for a higher terminal rate for the Fed. In case key US economic data like NFP and CPI comes out soft though, we should see AUD/USD rallying as the market would reprice lower future interest rate expectations.
On the 4 hour chart below, we can see that the price has been ranging for about a week but today’s RBA monetary policy announcement gave the sellers the catalyst to break out of the range.
The sellers may not be out of the woods yet though as today we will have Fed Chair Powell testimony and it’s expected that if he sounds dovish, the US Dollar will lose some ground so we may see the price getting back into the range, and in case he sounds hawkish, we should see the US Dollar getting even stronger.
On the 1 hour chart below, we can see more closely the breakout of the range caused by the RBA catalyst. The buyers will need the price to get back into the range to hope for another run into the resistance at 0.6781 which will need the support from the fundamentals.
The sellers may wait for a retest of the broken support now turned resistance before piling in again or more probably wait for the Fed Chair Powell testimony later today.
