AUD/USD was seen consolidating the recent strong gains to 20-month tops. Investors turn cautious ahead of the latest RBA policy decision on Tuesday. The set-up remains in favour of bulls and supports prospects for further gains.
The AUD/USD pair seesawed between tepid gains/minor losses through the early European session and was seen consolidating recent gains to the highest level since December 2018. Investors turned cautious and refrained from placing fresh bets ahead of the RBA policy decision on Tuesday, which, in turn, led to the subdued/range-bound trading action.
Given that the pair on Friday decisively broke through a five-week-old ascending trend-channel resistance, the near-term bias seems tilted firmly in favour of bullish traders. Meanwhile, RSI (14) on 4-hourly/daily charts is holding above the 70 mark and point to slightly overbought conditions, warranting some caution before positioning for any further gains.
That said, the pair still seems poised to move back above the 0.7400 mark for the first time since July 2018. The momentum could further get extended to the 0.7450-60 congestion zone.
On the flip side, the mentioned channel resistance breakpoint, currently near the 0.7400 mark, now seems to protect the immediate downside. Any subsequent slide might still be seen as a buying opportunity, which, in turn, might help limit the downside near the 0.7340-35 horizontal zone.