US stocks are still bearish, but the USD is turning down as well as US yields find some resistance. We see commodity currencies rising, which may have something to do with Chinese banks that cut a key interest rate for long-term loans, so they want to support their economy after the recent situation with the Covid lockdown.
As such, I think that Aussie can see more upside. From an Elliott wave perspective, we see price recovery away from 0.6830 after a divergence on the RSI, so a new bottom can form, especially if the current falling trendline from 0.7661 can be taken out. Rise above 0.7050, or even better, a daily and weekly close above that resistance zone will put more upside in play for the pair. We see room for 0.7267.
However, let us not forget on Australian federal election this weekend, on May 21, 2022. There is a chance for some gaps in prices next week, but overall, we think that the Aussie would find some buyers on hawkish RBA policy on any dips.
