The AUDUSD currency pair is trading flat following the greenback’s fightback during the session after the currency weakened following the remarks by some Fed officials that the tightening cycle in the economy might be coming to an end soon. The officials re-emphasized the need for continued hiking in the near term to fight off the persistently high inflation but also signalled that the current monetary policy tightening cycle could be getting closer to the end.
The Aussie Dollar was also underpinned by the positive economic indicators in Australia, with both consumer and business confidence improving in May. However, the US inflation data due later this week continued to weigh on the cross, with a higher-than-expected figure likely to boost the US Dollar, weighing on the Aussie.
The 4H chart shows that the price action has been confined within a trading range following a breakout above the descending channel trading pattern. With the 50-SMA (blue line) likely to provide significant support to the price action in the short term, the market could keep a keen eye on the range upper bound for a potential run towards the 0.67215 resistance level. A sustained break above 0.67215 would bring the 0.67658 resistance level, a fraction of the 0.68998, into play.
However, a short-term trading opportunity could exist as the price action breaks below the 50-SMA towards the 0.66371 support level. The fall of the 0.66371 price level would leave the range’s bound at the support level of 0.65947 to provide significant support.
The cross is currently trading close to the range’s upper bound, and the bulls could be hoping the upcoming inflation data could help initiate a breakout above the range, with the 0.67215 resistance level likely to act as a level of interest.
However, a hotter-than-expected figure could trigger a sell-off lower, with the 0.66371 acting as the initial level of interest for the bears.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
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