AUD/USD: Bearish potential limited while above 0.70

The AUD/USD pair recovered some ground last week, as the greenback remained out of the market’s favor. This week, the Reserve Bank of Australia (RBA) is having a monetary policy meeting but will probably be a non-event while the aussie is set to retain its bullish long-term potential, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“The upcoming week will be a busy one in Australia, as the country will publish updates on services output and inflation.  On Tuesday, the RBA will meet to decide on the economic policy, although the market is heading into the event without expectations, as central banks have made it clear that it’s time for wait-and-see. China will be on holidays for most of the week, which means there’s not much to take care off.”

“As for the US, the focus will be on the FOMC Meeting Minutes, to be out next Wednesday. Expectations for this event are also limited. Instead, the attention will remain on Trump’s health, and whether the US Congress is able or not to clinch a deal.”

“The weekly chart for the AUD/USD pair indicates that the pair has recovered its bullish potential. The pair has bounced from a bullish 20 SMA, which maintains its bullish slope above the 100 SMA. So far, the pair was unable to recover beyond a mildly bearish 200 SMA. Technical indicators, in the meantime, seem to have completed their corrective decline within positive levels, now turning higher.”

“The aussie’s bias will continue to depend on the market’s sentiment. As long as it holds above the 0.7000 figures, the bearish potential will remain limited, while a break below it exposes 0.6920. Once below this last, the next relevant level to watch is 0.6840. Resistances are located at 0.7200, and 0.7250, with gains above this last favoring an extension towards 0.7345.”