The Australian dollar rallied against most of its major trading partners last night after the Reserve Bank of Australia kept rates steady at 2.5% for the 9 consecutive month. The statement highlighted that the bank anticipates rates to remain stable and that the bank is pleased with the improvement in the labor market. With softer inflation, the bank will not have to think about tightening anytime soon. The Australian currency was higher throughout most of the European session as most high-beta currencies benefited from some positive data out of Europe.
For the last 12 months, AUD/USD has traded relatively range bound between .9800 and .8650. The last four months of trade however has provided a fairly steady rise after price made a 46-month low at .8659. Since forming a golden cross, that occurs when the 50-day SMA crosses above the 100-day SMA, price had one last key thrust from the .9260 zone to .9435 which is the 70.7% Fibonacci retracement 2013 high to 2014 low move.
Now that the major downward sloping resistance has been breached, upside momentum may target the .9450 region.
The trade: Buy AUD/USD at .9330 with a stop loss at .9280 and a take profit at .9430. The Risk/Reward Ratio is a little better than 1:2
Edward J. Moya
WorldWideMarkets Online Trading