Australian dollar surged to a two-year high versus the U.S. dollar, supported from the hawkish RBA minutes and U.S. dollar weakness. Trump needs two more votes to pass his healthcare bill which is difficult to get. Euro boosted from EZ CPI report while British pound dropped due to Brexit talks.
AUD/USD at a Two-Year High After RBA Minutes
The Australian dollar soared to a two-year high against the U.S. dollar following the release of the RBA’s minutes which underline the positives of the economic outlook. They discussed that a cash rate of 3.5%, well above the current 1.5%, does not stimulate or hold the economy back. The “neutral” interest rate is a signal that they may raise rates.
AUD/USD Technical Outlook
The Australian dollar has been gradually moving higher against the U.S. dollar today and it surged more than 1.4% so far, following the RBA meeting minutes very early in the morning. The strong upward run helped the AUD/USD pair to surpass and break the ascending triangle successfully. Meanwhile, the price printed a new more than two-year high at 0.7905 and the next level to have in mind is the 0.7980 – 0.8010 resistance area which overlaps with the 200-monthly SMA and the 200-weekly SMA. In a previous analysis, we mentioned that a surpass of the 0.7850 level will create an aggressive buying interest towards the pair (see the technical analysis here: https://bit.ly/2uAoY0x )
On the daily timeframe, the 50-SMA created a bullish crossover within the 100 and 200 SMAs, indicating a buy signal for the traders. There is no obstacle until the aforementioned zone while the technical indicators are also confirming the recent rising attitude. The RSI indicator is sloping to the upside in the overbought zone whilst the MACD oscillator climbed above the trigger line with strong momentum in the positive territory.
Greenback Plunged on Trump’s Political Weakness
The U.S. dollar plummeted during Monday’s session as two Republicans Senators rejected U.S. President Donald Trump’s health care bill. The plan needs two more votes to advance and many analysts believe is not going to happen. This development will delay the plans that follow the health bill program in Trump’s agenda, which are the tax and fiscal reforms. The failure of Trump to pass one of his biggest reforms and repeal Obamacare is raising concerns for his political power and add doubts whether the American economy can experience another Fed rate hike for the year. Furthermore, the New York Empire State manufacturing index for July dropped to 9.8 while it was expected to drop at 15.0 from 19.8 before. This index gauges business conditions for New York manufacturers.
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