Aussie Holds Bullish Trend as RBA Hike and Dollar Weakness Drive Gains

AUD/USD Climbs as RBA Hike and Broad Dollar Weakness Fuel the Move

The Aussie is still moving higher, with AUD/USD up over 0.50%. This could be a combination of the RB rate hike as well as overall USD weakness. The USD is weak against most majors. This may be due to hopes of a US-Iran deal with a mediator from Pakistan mentioning that Washington and Tehran were closing in on an agreement on a 1-page memorandum to end the conflict.

The 24-Hour FX Heat Map Shows Broad US Dollar Weakness

Currency Strength Heat Map Over the Last 24 Hours

Source: TradingView

Australian Industry Index Stays in Contraction

Not a great print for the Aussie growth story. The Ai Group Index Index’s latest release gives the notion that Australia’s industrial sectors remain in contraction. However, a caveat is that it is less bad than the -34.2 reading prior. This result can be attributed to the very slight pullback in AUD/USD. But it has not disrupted the overall bullish trend direction.

Australia’s Ai Group Industry Index Remained Deeply Negative at -24.4

Bar Chart of the Ai Group Australian Industry Index

Source: TradingView

AUD/USD Renko Pullback Cools After Breakout

The rally in AUD/USD is taking a bit of a breather. It is still trading above trend though. Around the 0.7277 level some supply showed up. But this is all part of the upmove. Higher highs and higher lows. RSI has dipped below 60 but the Score-SMA is showing that the upmove has peaked for now with a curling down of the indicator. A flip of the Supertrend who tell me that there is more downside to come. But no worries the overall trend is still up.

AUD/USD 0.001-Brick Renko Shows Above Trend Momentum Cooling

AUD/USD Renko with 0.001-Brick Size

Source: TradingView

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Support Levels: 0.6833,0.7031

Resistance Levels: 0.72715, 0.74070

Medium Term Path: AUD/USD needs to digest the recent move before attacking fresh highs. Broad US Dollar weakness and RBA-driven support keep the demand there. But we also have to monitor the Australian economy’s trickles of weakness due to the energy supply shocks. My expectations are for AUD/USD to hold above 0.70310 on any meaningful pullback. The Renko chart is still in an uptrend for the most part. A move above 0.72715 would confirm renewed upside momentum and make us have a look at 0.74070 highs.