AUDUSD still looking for direction

AUDUSD hasn’t shown any obvious direction since gains in the first half of May although the price is somewhat lower than where it started the year as the expected pivot by the Fed has been pushed progressively further and further back. Australian monthly inflation at 3.6% in April is only slightly higher than the figure for the USA, but the Reserve Bank of Australia (‘RBA’) hasn’t ruled out further hikes if the rate comes back up. Compared to many other advanced economies, Australia has done reasonably well in the last few months: while GDP has been more-or-less stagnant, there’s been no sign of contraction or technical recession.

The area around 65.7c looks like an important support because the price halted around there on 8 May and 9 June and this is also the area of the 100 and 200 SMAs. The 50 SMA from Bands might function as a dynamic support this week but since it’s started to rise more quickly in the last few days this is questionable. There’s no sign of saturation: the slow stochastic at about 40 is closer to neutral than oversold. 67c is the main resistance in focus. This area has been tested unsuccessfully four times since last month.

AUDUSD probably needs a catalyst from news to exit the current sideways trend. Logically, one would expect this to be from the next shift in expectations for the Fed in the second half of the year. That might come from surprising releases of inflation from either country, but it’s important to monitor the news from the RBA this week for any change in tone.

This is my personal opinion which does not represent the opinion of Exness. This is not a recommendation to trade.