AUDUSD is extending its recovery ahead of the PBoC decision

The AUDUSD has recovered despite the USD Index’s poor performance.

After a gradual correction, the AUDUSD pair has firmly recovered to near 0.6740. The Australian asset saw a surge in demand as the US dollar fell and China’s growth rate was revised upward. The US Dollar Index (DXY) is trading quietly ahead of the release of the Federal Reserve’s (Fed) Beige Book.

The RBA minutes revealed that policymakers were actively discussing a rate hike but ended the meeting with interest rates remaining unchanged.

The Australian Dollar remained active on Tuesday following the release of the Reserve Bank of Australia (RBA) minutes. The RBA minutes revealed that policymakers were actively discussing a rate hike but ended the meeting with a decision to keep rates unchanged at 3.6%. RBA Governor Philip Lowe stated that the central bank needs time to gather information before taking any further action.

Forecasting agencies were enthusiastic about raising Following an encouraging quarterly performance, China’s Gross Domestic Product (GDP) is expected to rise. The People’s Bank of China’s (PBoC) interest rate decision will be the key event in the coming months. It is worth noting that Australia is China’s largest trading partner, and positive Chinese prospects would support the Australian Dollar.

AUDUSD Technical Outlook

On an hourly basis, the AUDUSD is auctioning in an Inverted Flag chart pattern. An Inverted Flag pattern is a trend-following pattern that consists of a long consolidation followed by a breakdown. Typically, the consolidation phase of the chart pattern serves as an inventory adjustment in which those participants who prefer to enter an auction after establishing a bearish bias initiate shorts and current sellers add more positions.

The Exponential Moving Average (20-period) (EMA) at 0.6720 overlaps the asset price, indicating poor performance.

Meanwhile, the Relative Strength Index (RSI) (14) is hovering between 40.00 and 60.00, indicating the lack of a potential trigger.

A break above the March 22 high of 0.6759 will push the asset towards the April 03 high of 0.6693. A break above the latter would send the asset back to its February 06 low of 0.6855.

In an alternative scenario, a breakdown of the April 10 low at 0.6620 will expose the Aussie asset to the March 10 low at 0.6564, followed by round-level support at 0.6500.

AUDUSD Daily Trends