Daily Forex Update: AUD/USD

The Reserve Bank of Australia indicated that rate hikes are done for now, and that there’s a slight window for future tightening in 2010 – depending on inflation, decreased home sales, and lower building permit numbers. It’s unlikely that the RBA will act during the summer, leaving the last quarter of the year open for potential action. Both the intraday Australia 200 and the AUD/USD put in floors during Tuesday’s trading session.

The AUD/USD’s 15-minute chart shows support along the horizontal support level, with lows at 0.8278 (S1) and 0.8283 (S2). The Descending Triangle pattern has broken higher with the rally through 0.8340 (R); however, one factor that will affect follow-through higher is the four-bar Autochartist Initial Trend reading, which indicates that the Triangle broke within a distribution cycle. Because distribution is a volatile and sideways market direction, prices tend to exhaust at nearby support or resistance levels. This keeps prices in a wider and slightly less predictable range. Prices could exhaust at the 0.8380 level, which is a near-term high.