AUD/USD extends reversal and rises to test weekly highs

A slide of the US dollar pushed AUD/USD further to the upside during the US session.
The pair remains in a range but after today’s rally, closer to the upper limit.

The AUD/USD pair gained momentum on the back of a decline of the greenback across the board. The recovery of the pair was capped below the weekly high at 0.7340 and near the end of the sessions was hovering around 0.7435, up 20 pips for the day, about to post the second gain in a row.

Earlier today, the Reserve Bank of Australia as expected left interest rates unchanged. Governor Lowe confirmed that the central bank is in no hurry to change rates. The meeting had no impact on the Aussie. On Friday the release of the Monetary Policy Statement could offer more clues.

In a few minutes (at 21:00 GMT) the Reserve Bank of New Zealand will announce its decision. Also, no change is expected and it is likely to be a non-event. But any surprise could have an impact on the AUD/NZD pair and therefore on AUD/USD. During the Asian session, Chinese inflation data is due.

AUD/USD Technical outlook

“The sharp recovery suggests that bulls are willing to challenge bears' determination right above the current level, and technical readings in the 4 hours chart support so, as indicators resumed their declines after nearing their midlines, while the pair settled firmly above a bullish 20 SMA, which advances above the larger ones”, says Valeria Bednarik, Chief Analyst at FXStreet.

According to her, the key level to watch continued to be the July high at 0.7483, “as sellers will likely give up on a break above this last.” To test 0.7480/85, AUD/USD needs to break the 0.7440 resistance.