AUDUSD has formed lower lows and higher highs to form a megaphone on its 1-hour chart. Price is currently testing support and might be due for a move back to resistance around .7400.
The 100 SMA is above the 200 SMA to hint that the path of least resistance is to the upside or that support is more likely to hold than to break. However, price is below both moving averages, so these could hold as dynamic resistance around the middle of the megaphone at .7370.
Stochastic is pulling up from the oversold region, also reflecting the return of bullish pressure that might be enough to take AUDUSD up to the megaphone top. A break below support at .7330, on the other hand, could be followed by a longer-term slide.
The RBA decision might be a big catalyst early in the week, as the central bank is widely expected to revert to a more cautious stance due to the reinstated and extended lockdowns in major Australian cities.
The central bank would likely reiterate that they are not looking to taper or tighten monetary policy anytime soon, possibly leading to losses for the Aussie.
Meanwhile, dollar traders are looking ahead of the NFP release this Friday, as the report could show a slightly faster pace of hiring for July. Analysts are estimating a gain of 895K in jobs versus the earlier 850K increase, which should bring the jobless rate down from 5.9% to 5.7%.
However, another disappointing result could mean more downside for the dollar, as the Fed has emphasized they’d like to see more evidence of a jobs recovery before even considering tapering asset purchases.
A strong read, on the other hand, could revive tightening hopes since some policymakers are eyeing earlier rate hikes than initially anticipated.