- AUD/USD is back in the negative, giving back the solid gains triggered by the RBA surprise.
- The RBA has raised interest rates by 50 basis points in a strong move to curb inflation.
- The 200-day SMA caps the upside amid risk aversion and dollar strength.
AUD/USD has entered a consolidation phase below 0.7200 during the European session after seeing some good back and forth moves earlier in the Asian session.
The Aussie shed early losses in the Asian session and rose after the Reserve Bank of Australia (RBA) delivered a big surprise by raising key interest rates to between 0.50% and 0.85% at its meeting. monetary policy in June, beating the market consensus of a rate hike from 0.25% to 0.40%.
The RBA’s aggressive move was seen as preemptive to curb inflation. However, it didn’t take long for the bulls to fade the rally as risk flows filtered back in on concerns that aggressive monetary policy by global central banks could dampen economic growth. The safe-haven US dollar found new demand, which weighed on the pair.
The USD remains broadly supported, holding on to Monday’s gains even as US Treasury yields retreat as investors seek out Treasuries in times of tough market conditions.
The pair remains tied to risk trends and dollar price action amid a lack of meaningful US economic news later on Tuesday.
From a short-term technical point of view, AUD/USD found resistance again at the 200-day moving average at 0.7256.
While testing the 200 SMA, AUD/USD broke through the 50 and 100-day SMAs around 0.7220. However, with the bearish cross in play, the sellers pushed the pair back below the 0.7200 level.
For the bulls to move back higher, they must overcome the aforementioned critical barriers.
The 14-day RSI is flat above the midline, which keeps bulls hopeful.
AUD/USD daily chart
On the other hand, a sustained break below the psychological level of 0.7150 is needed to extend the pullback towards the round level of 0.7100.
The upsloping 21-day SMA at 0.7080 could be the last line of defense for bulls in the pair.
AUD/USD additional levels
Source: Fx Street
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