The bearish attempt on the key support level at US$0.7690 on Tuesday responded in a bullish ambush after the AUD/USD pair rebounded from an intraday low of US$0.7674.
In the upcoming sessions, tests towards US$0.7765 is seen as a minor cap, to which, if breached, views the near-term cap (rejection area) at US$0.7815.
The AUD/USD journey bumpy ride continued Tuesday, after the Reserve Bank of Australia (RBA) left interest rates at a record low of 0.10%, as widely expected.
There were no surprises from the Reserve Bank of Australia after the RBA Governor Philip Lowe made it clear that the board is unlikely to hike rates until inflation and wages are boosted.
“Despite the strong recovery in economic activity, the recent CPI data confirmed that inflation pressures remain subdued in most parts of the Australian economy,” the RBA said.
“A pick-up in inflation and wages growth is expected, but it is likely to be only gradual and modest.” The bank expects unemployment to fall from 5.6% in March to 4.5% by the end of next year and for GDP to grow 4.75% this year and 3.5% next year.
Mr Lowe reiterated that the board does not expect to raise the cash rate until 2024 at the earliest.
“It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest,” Lowe said.
Technically, a New York close beneath US$0.7690 would reinstate the bearish sentiment to US$0.7625-35. Reassess from there.
The resistance remains at US$0.7815 and seen as a near-term cap which expects another bearish ambush if contested, with the immediate resistance located at US$0.7765.