AUD/USD jumped to a three-week high on Wednesday after comments from an RBA official on a worsening inflation outlook. The pair broke above 0.70, but moving-average barriers sit just above.
AUD/USD advanced almost 0.5% in Asian and early European trading on Wednesday and hit a three-week high. An RBA official's comments about a worsening inflation outlook lifted the pair and reinforced the central bank's existing hawkish stance.
The move broke above the psychological 0.70 resistance. It also cracked the Fibonacci barrier at 0.7025, the 38.2% retracement of the 0.7237/0.6894 decline. According to ActionForex, a close above that level would confirm a bullish signal. The report also points to a double-bottom pattern after the rising weekly cloud contained the larger downtrend, which contributes to a reversal scenario.
However, bulls still face barriers. The immediate obstacle sits at 0.7032, the 100-day moving average, followed by 0.7046, the 200-day moving average, after the two averages recently formed a bear-cross. A sustained break above them would accelerate the recovery.
Momentum on the daily chart is strongly positive and supports the advance, but an overbought stochastic may produce headwinds for a rally that extends into a fourth consecutive day. ActionForex expects near-term action to stay biased higher while AUD/USD holds above 0.70, with support at 0.7000, 0.6990, 0.6975 and 0.6947.
Source: ActionForex
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