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Talking Points:
- AUD/USD Technical Strategy: Flat
- Aussie Dollar aiming at 2017 high after breaking above range resistance
- Steady stream of top-tier event risk looms ahead, arguing for patience
The Australian Dollar looks poised to test the 2017 high against its US counterpart after finally breaking stubborn chart resistance below the 0.80 figure. The move higher followed an RBA monetary policy announcement that did not seem to build on a vague threat of FX intervention made in recent weeks.
From here, a daily close above the 0.8066-87 area (July 27 high, 38.2% Fibonacci expansion) opens the door for a test of the 50% level at 0.8173. Alternatively, a turn back below the 23.6% Fib at 0.7979 – now recast as support – paves the way for a retest of a rising trend line set from early June, now at 0.7915.
Entering long seems compelling from a purely technical perspective. However, a hefty dose of event risk including second-quarter GDP data and high-profile commentary from RBA officials may drastically alter the setup however, especially if intervention is mentioned anew. Standing aside seems most prudent for now.
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