The Australian dollar hit new three-week high in early Tuesday’s trading, in extension of strong rally in past two days, after The Reserve Bank of Australia cut interest rates by 25 basis points to record low at 1.25%. The central bank cut rates for the first time in three years, in response to signals of country’s slowing economy. The action was widely expected and made no surprise in the market, with the Aussie maintaining positive tone on weakening US dollar. Fresh extension of recovery rally from 0.6864 base cracked key resistance zone at 0.6990/0.7000 (double Fibo/psychological barrier), with sustained break here expected to generate strong bullish signal and expose targets at 0.7034 (55SMA/50% of 0.7205/0.6864) and 0.7075 (100SMA/Fibo 61.8%). Rising bullish momentum and daily MA’s (5, 10, 20) in bullish setup, support the action, but bulls may show hesitation before breaking higher, as daily stochastic is overbought. Dips are expected to hold above broken 30SMA (0.6960) to keep bulls intact. Converging 10/20SMA’s (0.6926/30) mark pivotal support, loss of which will be bearish.
Res: 0.6993, 0.7000, 0.7020, 0.7034
Sup: 0.6960, 0.6944, 0.6926, 0.6898
