- Summary:
- AUDUSD is testing a critical resistance level after the RBA kept rates unchanged and made no mention of the Aussie's recent rise.
AUDUSD is trading around its opening price after the RBA kept its interest rates unchanged. As of this writing, the currency pair is at 0.6799, just 3 pips above its opening price.
For its June monetary policy statement, the RBA kept its interest rates steady at 0.25%. The target for its 3-year government bonds has also been retained at 0.25%. While they did not may any changes to policy, central bankers were quick to warn that they are ready to increase asset purchases if necessary. The RBA also warned that they would not raise rates until employment and inflation targets are hit.
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Consequently, it was no surprise that AUDUSD was virtually unchanged after the statement. It wasn’t until a few minutes after that the currency pair began to rise. This may have been brought upon by the realization that the RBA made no mention of the surge in AUDUSD. Since May, the currency pair has risen over 5%. The lack of attention to the Aussie’s rise can be interpreted as a sign that the central bank is not worried about its currency’s strength.
AUDUSD Outlook
On the weekly time frame, we can see that AUDUSD is testing resistance at the falling trendline (connecting the highs of January 21, 2018 and December 29, 2019). If there are enough buyers in the market, the currency pair could close above resistance around the 0.6800 handle. Should this happen, we could soon see AUDUSD trade higher to its December 29 highs at 0.7031.
Alternatively, if buyers lose their momentum, AUDUSD could fall to the 0.6700 handle. On the 4-hour time frame, it can be seen that this price offers a confluence of support. For one, it coincides with the rising trendline from connecting the lows of May 15, May 22, May 27, and May 29. Secondly, when drawing the Fibonacci retracement tool from the low of May 27 to today’s high, we can also see that it aligns with the 50% Fib level.