The Aussie has been trapped inside a very narrow trading range between the support level 0.7400 and resistance level 0.7620. However, as long as we stay above the big psychological number 0.7500 on a daily closing basis, we should expect the bullish momentum to prevail. But only a break and a daily close above 0.7620 can signal a material change in the trend, which can open the door for a retest of resistance level 0.7700.
The stochastic indicator is in overbought territory which can give the bears another change to challenge the big round number 0.7500. Only a daily close and break below 0.7400 can open the door for more bearish action. RBA’s recent hawkish tone can support the bullish case for the AUD/USD. The RBA revised higher its inflation forecast while the economic growth activity is expected to top 3.25% by year end. If the economy continues to improve we should expect the market to start pricing in higher interest rates.
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