The Australian Dollar (AUD) inched against the US Dollar (USD) on Wednesday, increasing the price of AUDUSD to more than 0.7650 after the Reserve Bank of Australia (RBA) Governor’s speach. The technical bias shall remain bullish because of a higher high in the recent upside rally.
As of this writing, the pair is being traded around 0.7687. A hurdle can be noted near 0.7700, the psychological number as well as trendline resistance ahead of 0.7726, the swing high of the last major upside rally as demonstrated in the give below daily chart. A break and daily closing above the 0.7726 resistance shall incite renewed buying interest, validating a move towards the 0.8000 resistance zone in long term. The technical bias shall remain bullish as long as long as the 0.7159 support area is intact.
On the downside, a support can be noted around 0.7600, the psychological number ahead of 0.7468, the confluence of 50% fib level as well as horizontal support area and then 0.7387, the trendline support area on bigger timeframes followed by 0.7159, the swing low of the last major downside move.
RBA’s Governor Speech
Reserve Bank of Australia governor Philip Lowe has denied the threat of a long undershoot of his 2-3 per cent inflation target but conceded that record-levels of household debt will complicate the task of normalising official interest rates. Warning that many households are suffering from a “sobering combination” of high debt and slow wages growth that will drag on spending, Dr Lowe acknowledged there was a real risk that businesses and consumers will come to think inflation won’t rebound. If inflation expectations are pushed lower in that way, that could entrench the low-rate, low economic growth, low wages trend of recent years – effectively producing a self-perpetuating spiral.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term.