AUD/USD Forecast: Overbought In The Short Term, But Still Bullish

• The Reserve Bank of Australia kept its monetary policy unchanged, as expected.
• Australia to release Q1 Gross Domestic Product, expected to have fallen by 0.3%.
• AUD/USD retains its bullish potential in its daily chart, despite extremely overbought short-term.

The AUD/USD pair has posted a substantial advance for a second consecutive day, reaching 0.6894 and finishing the day not far below this last. The RBA had a monetary policy meeting at the beginning of the day, and, as expected, policymakers kept rates on hold at a record low of 0.25%. They also reiterated that they would maintain the accommodative approach for as long as it is required to deal with the ongoing crisis. Uncertainty about how and when the economy will recovery persists, although the depth of the downturn will be less than earlier expected, according to the statement. The moderated optimistic tone of Lowe & Co. alongside encouraging local data coupled with the broad dollar’s weakness.

This Wednesday, Australia will release its Q1 Gross Domestic Product. The economy is expected to have shrunk by 0.3% in the three months to March, while the economy is expected to have grown by 1.4% when compared to the first quarter of 2019. The country will also publish the AIG Performance of Construction Index for May, previously at 21.6 and the Commonwealth Bank Services PMI, foreseen at 25.5 as previously estimated. China will publish the Caixin Services PMI for the same month, foreseen at 50.3 from 44.4 in April.

AUD/USD Short-Term Technical Outlook

The AUD/USD pair is extremely overbought according to intraday chats, but the bullish potential remains intact in the daily chart. Further gains are to be expected once above the daily high. In the 4-hour chart, technical indicators have flattened near their daily highs, with the RSI currently at 80. The 20 SMA has accelerated north above also bullish 100 and 200 SMA, with the shorter one now at 0.6735.

Support levels: 0.6830 0.6785 0.6735

Resistance levels: 0.6895 0.6930 0.6980