AUD/USD struggles to push above 200-Day SMA ahead of RBA

AUD/USD Outlook

AUD/USD appears to be on track to test the 200-Day SMA (0.6751) as it registers a fresh weekly high (0.6738), but the exchange rate may face a pullback ahead of the Reserve Bank of Australia (RBA) meeting on April 4 as it struggles to push above the moving average.

AUD/USD struggles to push above 200-Day SMA ahead of RBA

A bear-flag appeared to be unfolding after AUD/USD failed to push above the long-term moving average earlier this month, and a similar scenario may take shape going into April as it seems to be tracking the negative slope in the indicator.

Register here for the next Live Economic Coverage event with David Song

FOREX.com Economic Calendar

Nevertheless, the RBA rate decision may sway the near-term outlook for AUD/USD as the central bank acknowledges that ‘market expectations for the future path of the cash rate had shifted up materially since the February meeting.’

In turn, Governor Philip Lowe and Co. may implement another 25bp rate hike as ‘members observed that further tightening of monetary policy would likely be required to ensure that inflation returns to target,’ and AUD/USD may stage further attempts to push above the 200-Day SMA (0.6751) as the Federal Reserve appears to be at or nearing the end of its hiking-cycle.

However, a shift in the RBA’s forward guidance may generate a bearish reaction in the Australian Dollar as ‘members agreed to reconsider the case for a pause at the following meeting,’ and AUD/USD may track the negative slope in the moving average as a bear-flag appears to be unfolding.

With that said, another RBA rate hike may negate the continuation pattern as AUD/USD clears the range bound price action from earlier this week, but another failed attempt to push above the long-term moving average may lead to a pullback in the exchange rate like the price action from earlier this month.

Australian Dollar Price Chart – AUD/USD Daily

Chart Prepared by David Song, Strategist; AUD/USD on TradingView

• AUD/USD approaches the 200-Day SMA (0.6751) as it registers a fresh weekly high (0.6738), with a move above the moving average largely negating the bear-flag formation as it brings the monthly high (0.6784) back on the radar.
• A break/close above the 0.6780 (38.2% Fibonacci retracement) to 0.6820 (23.6% Fibonacci retracement) region opens up the 0.6870 (38.2% Fibonacci retracement) area, but AUD/USD may track the negative slope in the long-term moving average as long as it holds below the monthly high (0.6784).
• A move below 0.6660 (50% Fibonacci retracement) may push AUD/USD back towards the 0.6600 (23.6% Fibonacci retracement) handle, with the next area of interest coming in around the March low (0.6565).

--- Written by David Song, Strategist

Follow me on Twitter at @DavidJSong