The RBA failed to impress AUD bulls today. Market expectations leaned towards a more hawkish statement, but the RBA appears to believe there is no necessity for such action. Inflation remains elevated, with the CPI rising to 3.5% on a yearly basis, unexpectedly up from 3.4% in March. Quarterly CPI surged to 1% from 0.6% in the first quarter, driven primarily by services. Market sentiment indicates no expectations for rate cuts this year.
(AUDUSD Daily Chart)
The downtrend from March 2021 is still active, but the chart is no longer showing any lower lows. As a result, a triangle formation has emerged since late 2022, and the upper band of the trend channel is currently being tested. The recent decline in the dollar index has given AUDUSD the opportunity to retest 0.6650, but following the Reserve Bank of Australia’s (RBA) intervention, this resistance appears to be holding for the moment. Key resistance levels to monitor are 0.6650 and 0.6750. If the momentum shift persists, traders may witness these levels being surpassed in the coming weeks or months. Following the triangle’s completion, the price may target around 0.70.
However, as long as these resistance levels hold, AUDUSD tends to react to the lower line of the triangle. Traders may find it challenging to navigate during this period of heightened volatility, with potential for multiple fake breakouts or rejections on the horizon. Nevertheless, a change in trend could signal forthcoming medium to long-term trading opportunities.
