The AUDUSD rallied by +0.88% for the 3rd day straight early Tuesday morning as the Australian dollar gets boosted by hawkish RBA meeting minutes. Australia’s Central bank flagged the possibility of a June rate hike on the table in a bid to curb skyrocketing inflation. The pair bounced from a 22-months low as bulls reclaim the 0.7000 handles and gains are capped by 0.70500 mid figure.
The wage figures for the first quarter will be released on Wednesday and are expected to show annual growth picking up to 2.5%. Australian Job data for May on Thursday could show unemployment falling under 4.0% for the first time since early 1970.
The rally in US bond yields may help limit the USD downside ahead of the Fed member speeches in the New York session. Fed member Harker, Bullard, Meister and Fed chair Powell will be speaking ahead of US retail sales. This could be a major headwind on AUDUSD bullish bets.
The markets are pricing a 50bps rate hike in the next two policy meetings. This will play a key role in influencing the direction of the AUDUSD directional bias in the near term.
The AUDUSD rallied from 0.68500 paring last week’s losses after claiming the 0.7000 psychological figure, a 22-months low. The upside gains are currently capped by a bearish outlook and bulls may need to challenge the 0.7200 area coinciding with a 50-day moving average to reinforce the bullish momentum. A failure to break above the 0.7200 may see renewed selling pressure on the AUDUSD towards a 2-year low at 0.65500.
The MACD indicator shows the pair is quite bearish in the near term as Volume bars are trading below the 0.0000 benchmark. The moving averages are also in the bearish region indicating a possible trade to the downside in the near term. A close below 0.72000 will be critical for a renewed selling interest.
The ActivTrader sentiment shows that 51% of retail traders are slowly turning bullish on the AUDUSD. This could be Beijing easing lockdown measures bringing investor optimism and boosting demand on supply chains, although an aggressive Fed rate hike could threaten the sentiment.
The AUDUSD extended gains for the 3rd day breaking above the 0.7000 near-term barriers. The pair has a near-term resistance at 0.7050 which coincides with the Bollinger Band (20) baseline (yellow line). A break above that near-term high could see extended gains towards the 0.72500 area.
However, the divergence between the volume indicator and the price rally may indicate that the current move on the AUDUSD could be short-lived. The volume bars have greatly diminished in the last 4 days and the pair could resume a downside trend in the near term.