The Australian dollar rallied in early Monday’s trading, boosted by unexpected election victory of country’s center-right coalition.
The pair opened on Monday with gap-higher and advanced above 0.6900 barrier, recovering last week’s 1.8% fall.
Recovery from new 4 ½ month low at 0.6864 broke above initial resistance at 0.6910 (5SMA and eyes more significant barriers at 0.6942/48 (Fibo 38.2% of 0.7068/0.6864 / falling 10SMA) break of which would signal stronger recovery.
Rising momentum and daily RSI/stochastic reversing from oversold territory, support scenario.
On the other side, rising odds for rate cut continue to weigh on Aussie and traders focus on Tuesday’s speech of RBA governor Lowe for more information.
Market expectations for June rate cut rose to 68%, while July’s rate cut is fully priced in.
Sustained break above 10SMA would expose 0.6966 (50% retracement) and risk test of pivotal barrier at 0.6990 (Fibo 61.8% of 0.7068/0.6864 / falling 20SMA).
Failure to break above 10SMA would keep immediate risk shifted lower as overall picture is bearish.
Res: 0.6948, 0.6966, 0.6990, 0.7020
Sup: 0.6910, 0.6890, 0.6864, 0.6845