I wouldn't look too much into the gains so far today as it is also the result of some dollar weakness across the board. That mostly is attributed to the more tense and push and pull nature ahead of the Fed tomorrow, as outlined here.
But let's just analyse the chart to try and make sense of things ahead of the RBA decision later.
As things stand, the key downside level to watch remains the 0.7000 handle and that is one to be wary of in trading this week - depending on the RBA and Fed policy decisions that is.
For now, let's see how the RBA might influence things.
A 15 bps rate hike will meet market expectations going into the decision and as such, I don't see that being materially positive for the aussie. Sure, the currency may still benefit slightly but the 100-hour moving average @ 0.7102 and then recent highs at 0.7180-90 (alongside the 200-hour moving average @ 0.7184) will pose stiff resistance to any upside push.
As for a decision to hike rates by 40 bps, that will be a surprise as it could signal a rather aggressive RBA and one that the market is not really expecting. That will be bullish for the aussie and a push back towards 0.7200 will be eyed first.
Meanwhile, if the RBA does not hike rates and pushes the decision to June, that does create some unwinding in terms of market confidence and will likely see the aussie drop by a bit in the aftermath. The 0.7000 handle will be one to watch in that regard.
