After two days of wins, the AUD stumbled against the USD to close last week on the wrong end of the stick. The AUDUSD fell to and closed at 0.9253 after reaching a high of 0.9326 from 0.9277. Looking at its weekly chart, though, you can notice that the pair is presently sitting on the top of an uptrend line that started when it bottomed way back in March 2009. In my opinion, the 0.9200 marker appears to be a safer spot to place a long order given today’s gap down.
The pair could continue its ascent given its present uptrend. However, it might find some difficulty breaking above its two-year high around 0.9400. If and when it moves past 0.9407, it could easily push itself higher towards its 15-year high at 0.9851. On the other hand, if the 0.9200 psychological support and the uptrend line get breached, the tide could turn and the pair could head back down towards its 2010 low at 0.8578.
On the economic front, the Reserve Bank of Australia (RBA) is set to decide on its interest rate tomorrow (May 4). The bank is expected to hike its rate again by 0.25% to 4.50%, making the Aussie all the more attractive than the rest of the major currencies. Aside from the possible capital gains, those who are long on the Aussie could also get an extra 4.25% in interest rate differential. Sweet.