Hawkish RBA propels the Australian dollar toward a critical resistance level

The AUDUSD climbed to a one-week high on Tuesday morning after the RBA maintained interest rates at a 12-year high and adopted a hawkish stance regarding ongoing inflation risks, while remaining prepared to act if the economy weakens further.

The near-term movement is part of a recovery phase that began from the low of 0.6587 on October 30, buoyed by a gap-up opening on Monday.

A slight improvement in the technical outlook on the daily chart, with the price surpassing the 10-day moving average and the potential formation of a daily bullish engulfing pattern, offers an initial bullish signal. However, daily indicators still lean bearish, as the 14-day momentum remains in negative territory and the action is constrained by a thick daily Ichimoku cloud, indicating that more upward movement is needed to trigger a stronger recovery.

The recovery faces significant resistance around 0.6627 to 0.6645, which includes the 200-day moving average, the Fibonacci 23.6% retracement of the downtrend from 0.6942 to 0.6537, and the base of the thick daily Ichimoku cloud. A breach of this resistance zone is likely to ignite a stronger recovery, while failure to overcome these barriers may halt progress.

Market participants will closely monitor the developments surrounding today’s US election and the upcoming FOMC policy meeting.

Res: 0.6627; 0.6645; 0.6691; 0.6723
Sup: 0.6599; 0.6578; 0.6553; 0.6537