AUD/USD Reversal Gains Momentum as RBA Hike Looms
The AUD/USD pair has been trending lower since topping out earlier this month, forming a falling wedge pattern. However, recent price action suggests that the selloff may be losing momentum. On Friday, the pair broke above the falling wedge and downward-sloping 50 moving average, indicating further bullish price action.
The Reserve Bank of Australia (RBA) is expected to increase rates later this month, which may underpin the Australian dollar despite the Federal Reserve's recent hawkish policy pivot. The RBA governor Michele Bullock stated that inflation risks are starting to materialize, which could provide a short-term tailwind for the AUD/USD.
The relative strength index (RSI) has climbed toward overbought territory, indicating improving momentum. A breakout above 0.7145 could see the pair climb to around 0.7180, while a decisive close above this level would open the door for the price to retest 0.7205.
Renewed selling could see the pair retest its recent low around 0.7085. While the Greenback remains well-supported driven by the Fed's recent hawkish policy pivot, the technicals indicate that the AUD/USD's recent retracement may be nearing its competition.