The Aussie dollar is holding in a choppy near-term trading, entrenched within narrowing range, following strong rejections at both sides (0.7988 at the upside and 0.7874 at the downside) in recent sessions.
Solid support at 0.7900 is holding the downside for now, while session high at 0.7948 marks initial resistance.
Overall bullish structure keeps focus at psychological 0.8000 barrier which so far resisted attacks and eventual break here would spark further upside action and expose next target at 0.8164 (14 May 2015 high / 50% of larger 0.9503/0.6825 descend).
Australian inflation data are in focus (CPI q/q is expected to slow in Q2 according to the forecast at 0.4% vs 0.5% in Q1), with RBA Governor Lowe also due to speak on Tuesday and expected to give signals about central bank’s monetary policy, following hawkish minutes of previous meeting, released last week, which boosted the Aussie dollar.
Traders are also looking for signal from Fed which ends its two-day policy meeting tomorrow.
On the other side, signals of reversal generated by reversal of slow stochastic from overbought zone on daily chart and overbought daily RSI, keep the downside vulnerable.
Sustained break below 0.7900 support zone (reinforced by Fibo 23.6% of 0.7572/0.7988 rally and rising 10SMA) would generate initial bearish signal for extension towards pivotal support at 0.7830 (Fibo 38.2%), break of which would trigger deeper correction.
Res: 0.7948, 0.7967, 0.7988, 0.8000
Sup: 0.7900, 0.7874, 0.7830, 0.7800
