AUDUSD was able to recover from their dismal jobs report last week after finding support at the 50 EMA on the daily chart and close the week higher, breaking above .9000. The Reserve Bank of Australia (RBA) said that the weaker exchange-rate will help spur growth in the ailing economy, although the pair has bounced almost 350 pips since the .8659 low made on January 24.
The RBA Assistant Governor Christopher Kent said “there were good reasons to think that the Australian dollar has for the past couple of years been on the high side of fundamentals,” which had been the primary reason for the utter collapse in 2013. Kent acknowledged that the Australian dollar would have to remain weakened in order for the pick-up in growth to accelerate, and that the quantitative easing going on at the Federal Reserve and Bank of Japan (BoJ) could continue to keep the Aussie elevated.
Price action momentum on the daily chart has been subdued, slightly, and has remained range bound since breaking the descending trend line to the upside on February 4. The price range has been held within .8915 and .9070. However, the weak dollar sentiment could send the pair to retest resistance with important economic data next week, including the FOMC minutes.
If the pair can close above resistance, AUDUSD has the potential to trade up to .9145. On the other hand, the dollar could see a little boost heading into the FOMC minutes given that the Fed is unlikely to alter taper plans. Look for the 50 EMA to act as support, with .8915 as a secondary support level.