AUD/USD drops as RBA sees no reason to follow global rate hikes

AUD/USD fell to a session low of 0.7838 after the Reserve Bank of Australia (RBA) minutes showed the policy makers see no reason to follow global rate hikes.

The minutes said-

• Rate hikes abroad did not have "Mechanical" implications for Australian rates
• Any rate changes would be dependent on the domestic economy

The minutes also took note of the disinflationary impact of the strong Aussie dollar, subdued price pressures, low wage growth and spare capacity in the labor market.

Thus, AUD dipped across the board, although it could rebound if markets take into account the fact that the RBA has softened its language on the strong Aussie by adding the word "material" to its warning on the currency.

• "A material further appreciation of the exchange rate would be expected to result in a slower pick-up in economic activity and inflation," the minutes showed

AUD/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "The technical picture is bullish as the pair settled above the 38.2% retracement of its latest slump from 0.8098. In the daily chart, indicators maintain sharp bullish slopes, entering bullish territory straight from oversold readings while the price settled above an anyway bearish 20 DMA. In the 4 hours chart, the price accelerated sharply above a now bullish 20 SMA, while technical indicators regain their upward strength within overbought readings.  The next Fibonacci resistance comes around 0.7920, with gains above it opening doors for a steeper recovery."