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Within the Economic Landscape: AUD/USD and GBP/AUD Breakdown

AUD/USD GBP/AUD

Explore potential setups in AUD/USD and GBP/AUD price actions amid recent RBA decisions and market dynamics.

AUD/USD Eyes Retracement After Printing Higher High

The Reserve Bank of Australia (RBA) recently delivered another 25bps hike, leading to a surprising selloff in the Aussie Dollar. Despite the hike’s intention to lower the risk of a “larger monetary policy response,” the minutes revealed persistent concerns about high inflation and a robust economy. Governor Bullock hinted that the fight against inflation is far from over, projecting a potential economic challenge over the next two years.

Economic Landscape: AUD/USD and GBP/AUD Breakdown

The Australian Dollar has shown resilience post-selloff, supported by a strong economy and labor market, according to Governor Bullock. Analysts expect the Australian Dollar to continue its firmness, presenting potential upside risks to inflation. The RBA maintains a favorable position for another rate hike compared to the UK, EU, and the United States.

Recent data, including the Judo Bank Manufacturing and Services PMI Flash numbers, had a limited immediate impact on the Australian Dollar.

AUD/USD Price Action

AUD/USD experienced a significant rally following the rate hike, retracing to support at the 0.6350 mark before printing a fresh higher high. While the long-term descending channel persists, resistance at the 200-day MA (0.6600 level) may impede further bullish momentum. Sellers face downside support, complicating sustained downward movement. A potential golden cross pattern, with the 20-day MA crossing above the 100-day MA, suggests a bullish continuation.

Considerations for Trading AUD/USD

  • Preference for retracement before joining the trend.
  • Key support levels at 0.6484, 0.6445, and 0.6400.
  • Resistance levels at 0.6594, 0.6650, and 0.6691.
  • A break below 0.6350 would invalidate the bullish setup.

GBP/AUD Price Action

GBPAUD has been rangebound for approximately two months, with support at 1.9000 and 1.8950 and potential spillover to the 200-day MA at 1.8911. Possible shorts identify resistance at 1.9211, 1.9278, and the range high at 1.9338. These levels offer short opportunities, and a breakout improves the risk-to-reward ratio.

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