AUDUSD is currently trading inside an ascending channel on its daily time frame and is testing support. Price is also moving inside a short-term descending channel and might need to break past the resistance before establishing bullish momentum.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This suggests that the long-term rally is more likely to continue than to reverse. Stochastic is also pointing up to reflect the presence of buyers.
Gains could take the pair up to the resistance near the .8200 major psychological mark or at least until the mid-channel area of interest at .7950. However, if the short-term channel resistance holds, the pair could make another attempt at breaking below the larger channel’s floor at .7560.
Economic data from Australia has been mixed so far, with the current account balance showing a wider deficit of 9.1 billion AUD versus the estimated 8.8 billion AUD shortfall but still an improvement over the earlier 9.7 billion AUD deficit. Retail sales ticked higher at 0.5% versus the projected 0.3% uptick while the previous reading saw an upgrade.
The RBA statement is due next and no changes to the 1.50% interest rate is eyed. However, policymakers could talk about how inflation expectations drifted lower and how a higher AUD might keep price levels in check.
As for the US, political risks are currently pushing the dollar around, particularly with tax reform and the ongoing investigation into Trump’s ties with Russia in play. The House and Senate are expected to start discussions on merging their respective tax bill versions this week and more positive developments could buoy the Greenback higher.