Despite the temporary advance of the Australian dollar following the policy meeting of the RBA, the greenback remains on its own path to strengthening. Check out our latest analysis of the EURUSD to see where the U.S. dollar is most likely to head next.
The AUDUSD jumped following the highly anticipated monetary policy meeting of the RBA on the new distinctly hawkish-sounding tone of the Governing Council. It was stated that RBA eyes transition of the economy "from the recovery phase to the expansion phase".
The momentary upsurge in bullish momentum drove the AUDUSD higher during today's trading session. As shown on the 4H chart above, the price action consolidated above the 50-day MA (in green) and then broke out above the 23.6 per cent Fibonacci retracement level at 0.75508.
After the AUDUSD jumped past that crucial threshold, it also probed the 100-day MA (in blue). Presently, the bullish momentum appears to be waning just below the Distribution area (in red).
Notice that the 38.2 per cent Fibonacci at 0.76159 serves as a major resistance level. Not only that, but it is also about to converge with the 150-day MA (in orange). Therefore, a potential reversal from this significant turning point could drive the price action back below the 23.6 per cent Fibonacci.
In turn, this could result in the establishment of an Inverted Head and Shoulders pattern, provided that the price action then rebounds from the Accumulation range (in green).
Such a turn of events would then likely be followed by an upsurge towards the 61.8 per cent Fibonacci at 0.77210.
In the policy statement, the Governing Board said that the RBA would maintain its underlying monetary support level to foster future growth. The near-negative Cash Rate was expectedly kept unchanged at 0.10 per cent.
"These measures will provide the continuing monetary support that the economy needs as it transitions from the recovery phase to the expansion phase. […] The economic recovery in Australia is stronger than earlier expected and is forecast to continue. The outlook for investment has improved and household and business balance sheets are generally in good shape."