The Australian Dollar (AUD) fell broadly against the US Dollar (USD) yesterday, dragging the price of AUDUSD to less than 0.7450, following the release of the RBA minutes. The technical bias remains bullish because of a Higher High in the recent upside rally.
As of this writing, the pair is being traded near 0.7453. A support may be seen around 0.7442, the horizontal support as demonstrated in the given below chart ahead of 0.7332, another major horizontal support, and then 0.7284, the swing low of the latest major downside move.
On the upside, the pair is likely to face a hurdle near 0.7479, a key horizontal resistance level ahead of 0.7512, the swing high of the last major upside rally. A break and four-hour closing above the 0.7512 resistance area could incite renewed buying pressure, validating a move towards the 0.7600 area.
On Tuesday, the Reserve Bank of Australia gave few strong signals of a further cut to the cash rate, remaining relatively upbeat about the growth and employment but alert to the risks of persistently low inflation. According to the minutes of the June board meeting, when the RBA held the cash rate at 1.75 per cent after a cut in May, incipient wage pressures may eventually feed into core inflation, though not for a while.
A shock fall in first-quarter core inflation to below the bank’s 2 to 3 per cent target band triggered the interest rate cut in May, the first in year. Economists have not discounted a follow-up reduction in August, although current futures market pricing rates that only a 52 per cent possibility.
Considering the overall technical and fundamental outlook, selling the pair around 0.7479 with a stop loss placed around 0.7512 appears to be a good strategy in short term.