Author: Sir Amar – Technical Analyst
The AUD/USD pair has broken out of the consolidation formed earlier in the Tokyo session in a tight 0.6808-0.6828 range. The asset showed a recovery after hitting a low of 0.6764 on Friday. However, pessimism regarding the longer time frame is expected to guide the asset with confidence. AUD/USD appeared on course to test yearly lows around 0.6829 after failing to break above 0.7243, but the exchange rate could consolidate in the short-term while defending its June low of 0.6850.
As a result, the AUD/USD could be range-bound as the Reserve Bank of Australia (RBA) looks to further normalize monetary policy in the coming months. The exchange rate could attempt a break from the June high of 0.7283 as Governor Philip Lowe has pledged to do whatever is necessary to ensure inflation in Australia returns to target over time. Alternatively, a break of Wednesday’s high at 0.6965 will bolster Australian bulls. This will push the asset towards the psychological resistance at 0.7000 followed by the June 13th high of 0.7035.
On a four-hour timescale, the Australian bulls faced roadblocks around the potential demand zone, which lies in a tight 0.6828 to 0.6850 range and coincides with a new two-year low. If the asset breaks Monday’s low at 0.6793, dollar bulls will pull the asset back to the November 29, 2019 low at 0.6754. A break of the latter will generate more bids for the asset and further drag the major towards the 0.6670 October 2, 2019 low.