After a failed break attempt above the 0.8000 level in AUD/USD late last week, the pair has been consolidating below it today. Dips in the pair have been bought at 0.7960 support which was a prior resistance level that held the pair lower on four attempts, as seen on a 4-hour chart.
AUD/USD gained some upward momentum in the North American session today as the greenback fell under pressure. North American traders drove the US Dollar index (DXY) to the lowest level in 14-month today. DXY is nearing support at 92.62 which held the index higher in 2015 and 2016 on a daily chart. The index last traded at 92.78 for a loss of 0.41%.
The euro saw the biggest gain against the greenback among the majors with EUR/USD scaling above 1.1800 to trade at fresh 2.5 year high.
Pending homes sales in the United States were reported to rise 1.5% in June, ahead of the analyst forecast for a gain of 1.0%. On an annual basis, sales rose 0.7%. The data did not have a significant impact on the exchange rate.
The Reserve Bank of Australia will make their interest rate announcement at 00:30 EST. While it is not expected that the Bank raises rates, speculators will be looking for clues whether there is any intention to raise rates down the road.
Minutes from the last Bank meeting revealed that policymakers discussed the neutral rate and noted that it stands at about 3.5%, about two percent above the current interest rate.
AUD/USD rallied following the minutes release but RBA deputy governor Debelle knocked the exchange rate lower later in the week as he commented that the markets were looking too much into the discussion.
Nevertheless, alterations in the rate statement that could lead speculators to interpret a rate hike is on the horizon stands to trigger a rally in the currency pair.
The latest COT report revealed a sixth consecutive weekly build in the Australian dollar net long held by non-commercials to take it to a 15-month high. The position rose from 51,356 contracts to 56,374 to scale above the prior March peak of 53,138 contracts.
With the pair currently ranging between 0.7960 and 0.8000, a range break is likely to accompany a follow through. The next level of interest in the event of a bullish break falls at 0.8031 which is a respected level on a weekly chart.