Last night, the Australian currency rallied to the U.S. dollar after the RBA Minutes release kept investors’ expectations for rates to remain steady for quite some time. This morning’s positive U.S. housing data however has helped the U.S. dollar regain some of the overnight losses.
The RBA Minutes of this month’s policy meeting highlighted significant uncertainties regarding growth, a strong Aussie Dollar, slowing mining investment and easing inflation. GDP growth is expected to be moderate in the second quarter and while wage growth is subdued. The AUD/USD rally however was unable to take out the .9350 level.
This morning’s positive Housing Starts data and flat inflation reading in the U.S. gave the dollar a decent bid across the board.
The daily chart on AUD/USD shows that since forming a bullish Gartley pattern, price is working on a 6-day rally but has had difficulty clearing the 100-day SMA. Currently, critical resistance lies at the .9400 handle. To the downside, the .9250-.9300 area will provide key support for the pair. A daily close below here and price may aim for the 50.0% Fibonacci retracement of the 2014 low to high move at .9081. The current trend may see a deeper consolidation over the next month with the downside risks growing.
The trade: Sell AUD/USD at .9330 with a stop loss at .9405 and a take profit at .9180. The Risk/Reward Ratio is 1:2
Edward J. Moya
WorldWideMarkets Online Trading