The AUDUSD recorded modest gains above the 0.6800 level on the cautiously optimistic remarks of Reserve Bank of Australia (RBA) Governor Lowe.
Governor Philip Lowe remarked that the Australian economy had reached a gentle turning point. He also reiterated that the board of the RBA would ease the monetary policy further if needed, in order to boost employment and economic growth. Lowe also said that he was “expecting a modest pick-up in economic growth in the quarters ahead..”
In responding to some questions from the audience, Lowe added that even though the RBA would consider quantitative easing under some circumstances, this would be an unlikely event.
With no major news from Australia this week, the AUDUSD can be approached from a technical point of view.
The AUDUSD pair had been looking for a positive break from the selloff, and this speech provided it. Traders have so far been willing to ignore the comment about the use of monetary easing if required. They have instead focused on the positives and sent the pair higher.
After trading in a consolidation in Monday trading, the AUDUSD has spiked above the upper limit of this range to touch the 0.6808 mark (20 Sep high), albeit with a pullback to the R2 pivot (0.6790).
The AUDUSD pair has begun to tick upwards once more, and if it continues its intraday upward projection, it should be able to get to the previous intraday highs. Above the intraday resistance, a future pit stop could lie at the Sep 19 high of 0.68326 (Sep 17/18 lows in role reversal). This is also the site of the 38.2% Fibonacci retracement from the 18 July high to the Aug 7 low.
On the flip side, failure to break the 0.6798 R3 pivot could open the door for a resumption of the downtrend which would target 0.6772 (23.6% Fibo level) and 0.6763(Sep 20 low).Download our latest quarterly market outlookfor our longer-term trade ideas.
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