- The Aussie is showing bearish divergence at five-month highs.
- Hawkish RBA minutes and hopes of Fed cuts have boosted support for the AUD.
- The Dollar remains depressed despite Fed officials' efforts to push back rate cut hopes.
Investors´ appetite for risk as they see the end of the central bank´s tightening cycles has pushed the Aussie to nearly five-month highs. The pair is nearing the 0,6810 resistance area although the bearish divergence on the 4-hour chars suggests a reversal might be in the cards.
A hawkish RBA and Fed cut hopes are supporting the Aussie
The minutes of the RBA´s last meeting, released on Tuesday reflected a hawkish tone, with the bank keeping the options open for further tightening despite the “encouraging signs” on inflation.
This, coupled with the overall Dollar weakness, underpins support for the Aussie. The US Dollar Index remains close to four-month lows as investors ignore Fed officials’ efforts to push back hopes of March cuts.
Technical indicators remain bullish although the mentioned divergence and the hesitant mood seen on Wednesday might be anticipating a reversal or, at least some consolidation.
Immediate resistance lies at 0.6775, ahead of late July highs at 0,6820 and 0.6845. Support levels are 0.6735 and 0.6690.
Technical levels to watch
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