On Tuesday AUD/USD demonstrated multidirectional dynamics around the level of 0.6900. With the beginning of the session sellers took the initiative, with the opening of Europe, the buyers began to show activity.
Some strong macroeconomic statistics of Australia were released the day before. Retail sales within a month grew by 1.3% while the forecast was 0.3%. Today the positive news background has reversed. The number of housing construction permits issued in July has fallen by 17.2%.
The Reserve Bank of Australia plans to continue its monetary tightening cycle but will slow the pace of monetary restriction. After three consecutive 50-basis-point rate hikes, a 0.25% increase is expected in September. Nevertheless, the RBA will raise the rate to 2.10% by the end of this year and to 2.50% by the middle of next year. The current interest rate is 1.85%.
AUD/USD Technical analysis
On the daily chart Bollinger Band indicator continues to decline, as well as the MACD indicator, whose histogram is in the negative area. Stochastic oscillator is actively declining, approaching the boundary of the oversold area - the 20% level.
In case of a confident breakdown of resistance at 0.6950 we consider buying in small lots with the target point at 0.7050. Let's place protective stop at 0.6900.
In case of breakdown and consolidation below support at 0.6839, we return to short positions with Take Profit at 0.6750. Stop-loss is set at 0.6880.