After slumping down to six-month lows, the AUDUSD currency pair has been on a resilient path of recovery, with the latest assistance coming from a second consecutive surprise from the Reserve Bank of Australia, who opted to defy the odds and raise the cash rate by another 25bps to 4.10%. 

The interest rate rise has pushed the cash rate to its highest level in eleven years, as wage pressures and persistently high inflation enticed the RBA to remain on its restrictive path. With the Australian Dollar strengthening, the greenback moved in the opposite direction. The ISM Services PMI of 50.3 showed that services activity expanded slower than the 52.2 expectation from the prior 51.9. The unexpected moderation boosted bets of the Federal Reserve to pause their rate hike cycle in the June meeting next week.  

Technical 

On the 4H chart, the resilient path to recovery becomes evident, with the bears retracing from the late May bottom and teasing the 61.8% Fibonacci retracement at $0.6681. However, a rising wedge has formed, which could keep traders on their toes as a breakdown remains on the cards. 

If the bulls can ride the optimistic momentum, a sustainable breakout from the Fibonacci golden ratio at $0.6681 could ease some of the immediate downside fears, which could entice the bulls to push higher toward $0.6709. An additional breakout could signal a continuation of the retracement, bringing the 78.6% Fibonacci retracement at $0.6739 into the spotlight. 

However, if the market resists at the golden ratio, a correction toward the Fibonacci midpoint at $0.6639 is possible. A move lower at this level could trigger the rising wedge breakdown toward $0.6598, the 38.2% Fibonacci retracement. In this case, lower support exists at $0.6568 and $0.6547 if the greenback finds its footing again. 

Summary 

On another hawkish surprise from the RBA, the AUDUSD currency pair continued its recovery. While the bulls face resistance at $0.6681, a breakthrough could open a path toward $0.6709. Alternatively, stern resistance from the market could force a correction, where the $0.6639 level becomes pivotal. 

Sources: Koyfin, Tradingview, Reuters