AUDUSD hits four-month high, overbought studies warn that bulls may start losing traction

AUDUSD extends the latest upleg from 0.7121 higher low into fifth consecutive day, underpinned by growing expectations for RBA rate hike at the policy meeting on Sep 29.

The latest comments from RBA policymaker underlined bank’s strong concerns about inflation which remains well above 2% target, although it has eased by 1.1% since March (July inflation was at 3.5%).

Threats of escalation of the Middle East crisis that would further lift inflation, keep RBA officials alerted, with likely action for 25 basis points hike in September (from 4.35% to 4.60%) and growing expectations of lifting borrowing cost to 4.85% into 2027.

Aussie hit the highest in almost four months against the US dollar on Tuesday, with no significant reaction on downbeat Australia’s economic data released earlier today, but with initial signals that larger bulls might be start running out of steam, developing on daily chart.

Daily RSI is at the border of overbought territory, bullish momentum is fading and stochastic is overbought, contribute to the scenario.

Broken bull-channel upper trendline (0.7200) offers immediate support, followed by broken Fibo 76.4% of 0.7277/0.6865 / 10DMA) where dips should find a footstep.

Traders will also focus on release of US Aug CPI (Sep 11) for fresh signals.

Res: 0.7230; 0.7264; 0.7277; 0.7300
Sup: 0.7200; 0.7180; 0.7147; 0.7120