AUD/USD: Technically Bullish, RBA Risk Ahead

If this was not the rich fundamental-driven week it’s going to be, I’d say the technical and intermarket studies keep screaming to buy the Aussie on dips. But such a strategy would find one relatively soon in a fairly dangerous position as the RBA monetary policy outcome represents an immediate downside risk for the Australian Dollar. By now, the Central Bank should have collected sufficient evidence to tone down the outlook for the economy, a view being expressed by the yield curve as shown above. Technically, the Aussie still finds itself in a newly established up-cycle, while the slope in the 5-DMA of the DXY, Yuan, equities and even the Aussie vs US yield spread all benefit the pair. The alignment of all these factors should guarantee solid flows during Monday ahead of the reset play.