AUD/USD is Technically Poised to Break Higher and Challenge the 0.7600 Price Zone

AUD/USD Current Price: 0.7517

• The Reserve Bank of Australia will likely drop its yield curve control.
• Dismal Chinese data prevented the pair from rallying at the beginning of the day.
• AUD/USD is technically poised to break higher and challenge the 0.7600 price zone.

The AUD/USD pair recovered from an intraday low of 0.7485, posting a modest intraday advance on Monday. The pair started the day on the backfoot, undermined by poor Chinese data. The October NBS Manufacturing PMI contracted to 49.2 missing expectations of 49.7, while the non-manufacturing index was also worse than anticipated, down to 52.4. The positive tone of global indexes helped the pair to recover above the 0.7500 thresholds, now trading in the 0.7520 price zone.

The focus will be on the Reserve Bank of Australia, as the central bank will announce its decision on monetary policy. At the same time, the country will publish October TD Securities Inflation previously at 2.5% YoY. After quarterly inflation unexpectedly soared to 2.1% QoQ in the third quarter, speculative interest rushed to price in a sooner rate hike. The RBA has materially dropped its yield-curve control on its April 2024 bond and is expected to formally announce it today. Rates, however, are expected to remain on hold at this time, but it is now clear that Governor Philip Lowe will announce changes to the forward guidance.

AUD/USD short-term technical outlook

The AUD/USD pair is bullish, according to the daily chart, trading well below its 20 and 100 SMAs. The 200 SMA capped advances last week, currently at 0.7555, October monthly high. Meanwhile, technical indicators lack directional strength, but remain well into positive levels, indicating the absence of selling interest.

The 4-hour chart shows that AUD/USD is hovering around a flat 20 SMA, while the longer moving averages keep heading north below the shorter one. Technical indicators lack directional strength, hovering just above their midlines. It all comes down to the RBA, although a break above 0.7555 will likely trigger stops and spur a continuation rally towards the 0.7600 area.  

Support levels: 0.7490 0.7450 0.7410

Resistance levels: 0.7555 0.7590 0.7625