AUD/USD Technical: Positive momentum ahead of RBA

• AUD/USD rallied by 97 pips from last Thursday, 29 June low of 0.6593.
• Staged a minor bullish breakout ahead of RBA’s monetary policy decision today.
• Watch 0.6630 key short-term support to maintain the current bullish tone.

Since its 0.6593 minor low printed last Thursday, 29 June, the AUD/USD has managed to stage a rebound of 97 pips to print an intraday high of 0.6692 yesterday, 3 July ahead of Australia central bank, RBA’s monetary policy decision out later today at 0430 GMT.

The interest rates futures market has implied a reduction in the odds of a 25 basis points (bps) hike due to the recent softer-than-expected annualized monthly CPI data for May; 5.6% from 6.8% in April and below expectations of 6.1%. As of 3 July 2023, the ASX 30-day interbank cash rate futures has priced in a 16% chance of a 25 bps hike on the cash rate, down from a 53% chance that was priced two weeks ago on 16 June.

Fig 1: AUD/USD short-term trend as of 4 Jul 2023 (Source: TradingView, click to enlarge chart)

Minor bullish breakout

The AUD/USD has managed to exit from the upper limit of a minor descending channel that was in place since its 16 June 2023 high of 0.6900 now acting as a pull-back support at 0.6630.

This latest set of price actions has indicated that the minor downtrend phase from the 16 June 2023 high of 0.6900 to the 29 June 2023 low of 0.6593 is likely to have ended.

Short-term positive momentum has resurfaced

The 4-hour RSI oscillator has just broken above a corresponding resistance at the 47 level after it exited from its oversold region last Thursday 29 June.

Watch the 0.6630 short-term pivotal support (the pull-back of the former minor descending channel resistance & former minor swing high area of 29/30 June 2023) and clearance above 0.6720 (20-day moving average) sees the next resistance coming in at 0.6790.

However, failure to hold above 0.6630 negates the bullish tone to expose the 0.6580/6550 key medium-term pivotal support zone.

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