- RBA undecided on future policy moves
- Markets expect one more hike but not sure when
- AUDUSD facing significant resistance despite a weaker dollar
It’s safe to say there’s quite a balanced debate taking place at the Reserve Bank of Australia right now, with policymakers torn on whether conditions have become restrictive enough and if a little more will do more harm or good.
While markets appear confident that the RBA will hike once more this year, when that will come is far less clear.
And as we’ve seen so much this year, expectations have a knack of changing quite considerably over a matter of weeks, let alone months. In other words, investors are no more certain than the policymakers themselves.
Can AUD/USD break higher amid greenback weakness?
The mixed messages aren’t helping to deliver much direction for the Australian dollar, with recent moves against the greenback being more driven by the latter’s weakness more so than the strength of the former.
AUD/USD Daily
Source – OANDA on Trading View
It ran into resistance recently around 0.6850-0.69 which has historically been a major barrier of support and resistance, most recently in mid-June.
If it can break above here, 0.70 could be one to watch being a big round figure as well as a key level earlier this year when it made up both shoulders in a head and shoulders pattern.
If the price continues to pull back as it has in recent days, 0.67 could be very interesting with it being the level that the 55/89 and 200/233-day simple moving average bands merge. It would also fall around the rising trend line from the May lows.
