AUD/USD has remained above the support level of $0.7400 even as the bulls lack enough momentum to sustain it at the resistance zone of $0.7450 which it reached earlier on Tuesday. On the one hand, the surge in Chinese exports and imports has boosted Aussie. The market’s reaction is founded on the fact that China is the leading destination for Australian exports including iron ore.
Nonetheless, the dovish tone held by the Reserve Bank of Australia (RBA) has weighed on AUD/USD. The central bank has left interest rates unchanged at the record low of 0.10%. Besides, it has maintained its QE program as it takes time to observe the impact of the coronavirus pandemic on the economy. Recently, Victoria and New South Wales, which make up more than half of the country’s GDP, were on lockdown.
AUD/USD remains buoyed above the resistance-turn-support level of 0.7400 even after plunging from its intraday high. Earlier in the day, higher-than-expected data on Chinese imports and exports boosted the currency pair to a high of 0.7468.
However, the dovish tone from RBA reversed the gains to a low of 0.7410. At the time of writing, it was down by 0.2% at 0.7424.
On a two-hour chart, AUD/USD is trading between the 25 and 50-day exponential moving averages. In the near term, I expect the pair to remain above 0.7400. it will likely find support along the 50-day EMA at 0.7407.
On the upside, it may hover around the 25-day EMA at 0.7431 while it experiences resistance at 0.7450. However, this thesis will be invalidated by a move below the support zone of 0.7400.