AUD/USD's Sharp Recovery Despite Consolidation Breakdown

The AUD/USD is currently experiencing bullish momentum, and we are looking to capitalize on the next upward movement using a trend-following setup. However, in terms of fundamental analysis, the AUD/USD pair is facing difficulties in sustaining its current rally above 0.6680. This rally was initially sparked by the unexpected announcement of an interest rate hike by the Reserve Bank of Australia (RBA). RBA Governor Philip Lowe raised the Official Cash Rate (OCR) by 25 basis points to 4.10%, despite the fact that Australian inflation levels are significantly below the desired target. As a result, the policy divergence between the RBA and the Federal Reserve (Fed) has narrowed.

The S&P500 futures are exhibiting a subdued performance, lacking any significant triggers. The overall market sentiment is cautious as investors hold differing opinions regarding the June monetary policy meeting by the Fed.

After a decline driven by weaker-than-expected United States ISM Services PMI data, the US Dollar Index (DXY) has found some support around 103.80.

Interestingly, the AUD/USD witnessed a strong recovery despite breaking down from its consolidation range of 0.6563-0.6808 on a daily basis. The lack of sustained selling pressure on the Australian dollar following the consolidation breakdown contributed to this notable rebound.

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