AUD/USD extends gains after RBA minutes release

AUD/USD extended gains to a fresh session high of 0.7435 after the minutes of the Reserve Bank of Australia (RBA) policy meeting sounded slightly upbeat on the core inflation.

Core inflation to pick up to around 2% by early 2018

The minutes said the March quarter inflation increased the odds of the core inflation rising to 2% by early 2018 as expected. The upbeat comment on core inflation appears to have pushed the AUD/USD higher from 0.7425 to 0.7435 levels.

The comments on the labor market, housing market and wage growth are largely in line with what markets already know. The Aussie 10-year bond has not moved post the minutes release and was last seen trading largely unchanged on the day around 2.602%.

Thus, there is little motivation for markets to boost AUD longs by a significant proportion.

AUD/USD Technicals

Despite the four-day winning streak and the positive action in the Asian session, the daily RSI remains below 50.00. A strong resistance is noted at 0.7455 (50% Fib retracement of 0.7160-0.7749 + downward sloping trend line hurdle). A break higher would expose 0.7473 (Apr 12 low) and 0.7503 (4-hr 200-MA).

On the lower side, support is seen at 0.7394 (5-DMA + 10-DMA) - 0.7389 (4-hr 50-MA) ahead of 0.7368 (May 5 low) and 0.7328 (May 9 low).