Technical Bias: Neutral
- AUDUSD trades at 0.7822 in Tuesday’s Tokyo session.
- Broad market forces support a reversal for the AUDUSD after last week’s decline.
- US Q1 GDP revision could show a 0.8% contraction year-on-year.
The AUDUSD is poised to resume its uptrend this week, as fading RBA rate cut bets and a data-driven US dollar could support corrective price action.
The AUDUSD was trading at 0.7822 in Tuesday’s Sydney session, advancing 0.1 percent. The AUDUSD is trading below the 100-day simple moving average (0.7877) after a broad US dollar rally set the pair back at the tail end of last week.
On the technical scale, the AUDUSD faces initial support at the psychological level of 0.7800, which is also the daily low. A break below that level would target the April 22 close of 0.7715. On the upside, initial resistance is located at the psychological 0.7900 level, followed by 0.7982.
The 1-hour chart shows a slight bearish bias for the AUDUSD:
However, the daily chart supports bigger upside for the AUDUSD, in line with our prognostication:
RBA Rate Cut Bets
The Reserve Bank of Australia slashed interest rates to a new record low of 2 percent earlier this month, but appears to be in no rush to ease monetary policy further. This position was elaborated by RBA deputy governor Philip Lowe, who said last week that the central bank probably won’t introduce additional stimulus in the near-term. The minutes of the May policy meetings left the door open to another rate cut.
US GDP Revision
The US dollar’s recent role reversal could run out of steam this week, as the Commerce Department is widely expected to lower its first quarter GDP estimate on Friday. The revised estimates could show US GDP contracted 0.8 percent annually in the first quarter, according to economists polled by Bloomberg. The government’s preliminary estimate showed the US economy expanded just 0.2 percent annually in the first quarter.