Having provided solid support over the last three months, the 0.6850 level would have been expected to offer some resistance and it may still perform this role, if this current rally stalls.
Towards the end of July, the AUDUSD suffered strong falls which sent it down to its recent trading range around 0.6750. Just prior to this fall, the AUDUSD had surged strongly back up to the key level of 0.7050 as it then looked poised to threaten this level and possibly move higher. Two weeks earlier it tested the level as it reached a seven week high on the back of a steady climb higher over three weeks as it moved from support at 0.6850.
In the middle of June it did drop sharply to its then lowest levels for 2019 pushing through any support around 0.6850 for a short period of time before being bought up again. For the last three months, the AUDUSD seemed content to trade within the range between 0.6850 and 0.7050, before the recent drop lower. Despite several attempts, the AUDUSD has been unable to move back above the 0.7050 level as it is now offering resistance and preventing it from returning to its range above 0.7050.
Last week the Reserve Bank of Australia (RBA) kept its official interest rate on hold at a historic low of 1%, despite some signs the Australian economy slowed in the June quarter. This was after the RBA board made consecutive rate cuts in June and July. In its statement released with the rates decision, the central bank amended previous references to GDP growing by 2.5% this year and 2.75% in 2020 to say it now expected growth to be in line with "trend over the next couple of years". "Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth and declining housing prices and turnover," RBA governor Philip Lowe said in the statement. Dr Lowe's statement also deleted references to softness in the housing markets, instead noting, "There are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne". Last Wednesday it was confirmed that Australia’s GDP grew by 0.5% in the June quarter, bring year on year growth to 1.4%, which is its lowest level since the global financial crisis.
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