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The Reserve Bank of Australia (RBA) was on show last week (ended 5 February), with its seemingly dovish policy meeting having just a flicker of a reaction – providing a marginal decline to 0.7564 lows. Benjamin Wong, Strategist at DBS bank, notes that AUD/USD upside pressure persists on bullish flag pattern. 

Key quotes

“Most of the underlying factors that support AUD’s bullishness remain intact, as Australia’s trade tensions with China have not inhibited iron ore and LNG.” 

“The weekly chart now carries a bullish flag pattern, and AUD remains in a bull mode until we see a sustained decline under 0.7366.”

“The recent bounce shows there is accumulation gathering just around the 55-DMA (currently at 0.7603), and without significant pressure to force a decline in the piping, AUD looks poised to gather more ground to the topside.” 

“A break over resistance markers at 0.7805 and 0.7816 would intensify a continuation of the rally that could possibly eye a 223.6% price extension of the prior triple bottom at 0.7988 (on a break of 0.7917). At such levels, one should expect AUD’s rally from last November to cool and contour a proper correction.”