A bullish reversal appears on cards

• AUD/USD rebounds after consolidating around 0.6400 as US Dollar loses resilience.
• The USD Index turns sideways this week after a five-week winning spell as investors await a trigger for further action.
• AUD/USD delivers a breakout of the Symmetrical Triangle chart pattern.

The AUD/USD pair rebounds after building a base near the round-level support of 0.6400 in the European session. The Aussie asset manages to defend the downside bias as the US Dollar loses resilience ahead of the Jackson Hole Symposium. Also, investors shrugged off deflation risks associated with the Chinese economy as the People’s Bank of China (PBoC) lowered the one-year Prime Lending Rate (PLR) to 3.45%.

The US Dollar Index (DXY) struggles to find a direction after sensing a severe upside restriction near 103.50. The USD Index turns sideways this week after a five-week winning spell as investors await a trigger for further action.

Meanwhile, Economists at UOB Group expect that the RBA has held rates unchanged for two consecutive months, and following the slew of data we think they will keep policy unchanged at its next two meetings on 5 Sep and 3 Oct, unless we get upside inflation surprises from Jul CPI data on 30 Aug and Aug CPI data on 27 Sep.

AUD/USD delivers a breakout of the Symmetrical Triangle chart pattern formed on an hourly scale. A breakout of the aforementioned chart pattern results in wider ticks and heavy volume. The asset stabilizes above the 50-period Exponential Moving Average (EMA) at 0.6420 but still faces barricades near the 200-EMA around 0.6455.

The Relative Strength Index (RSI) (14) shifts into the bullish range of 60.00-80.00, which indicates that the upside impulse has been activated.

A decisive break above August 16 high around 0.6480 will drive the asset toward August 15 high at 0.6522, followed by August 10 high at 0.6616.

In an alternate scenario, a downside move below August 18 low at 0.6380 will negate the triangle breakout and will expose the asset to a fresh nine-month low around 0.6300. Slippage below the latter will expose the asset to 03 November 2022 low at 0.6272.

AUD/USD hourly chart