Aussie Holds Firm After RBA Rate Hike

The Aussie is still holding up. A slow grind higher. Over the past 5 days AUD/USD is up close to 1% and over the last 24 hours it is marginally higher. RBA hike should help in the medium term but we still have to be cautiously optimistic. There is still USD safe haven demand lurking around due to the Gulf tensions. Wars and rumors of wars can cause increased volatility out of nowhere.

AUD/USD Holds a 5-Day Gain

AUD/USD 5-day TradingView line chart

Source: TradingView

RBA Raises Rates to 4.35%

No shock with the RBA hike. The cash rate increased to 4.35% from 4.1%, matching expectations. The vote was more hawkish than March with an 8-1 for a hike. Since it was already priced in and there was no surprise AUD/USD’s reaction was muted. However the interest rate differential will still help AUD, especially if markets believe the RBA has to stay tighter because inflationary pressures aren’t going anywhere anytime soon. The RBA did say that policy is “well placed”. So there may be a bit of a pause. Overall, bullish. But mildly as there are geopolitical tensions still looming about. The bigger issue now is oil so we have to keep up with what’s going on in the Gulf.

RBA Lifts Cash Rate to 4.35%, Matching Forecasts

Bar Chart of the RBA Interest Rate Decision

Source: TradingView

Supertrend Flip Needed for AUD/USD on Renko

From the Renko view AUD/USD is still above trend which keeps the structure constructive despite the Supertrend being flipped to the negative side. RSI is above 50 which indicates slightly positive momentum and the Z-Score SMA is tilting slightly upward. This illustrates that the recent pullback may be nearing an end for the FX pair. We need to see a positive flip on the Supertrend which should give the all-clear for a re-test of the monthly highs for AUD/USD. If the negative Supertrend holds, we may see a re-test of the long term 500-SMA.

AUD/USD Renko Above Trend With Flipped Negative Supertrend

AUD/USD 0.001 Renko Chart

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: A slow grind higher for AUD/USD in the medium term. The RBA hike provides the Aussie with some support. Yes the demand is still there. But we need to see a positive flip on the Supertrend and momentum to push AUD/USD higher towards 0.72715. From there the next level to watch would be 0.7407.