Bullish Opportunities Emerge as RSI Reaches Extreme Levels

Forex

Economic

Summary:

This points to a clear convergence signal, suggesting that bearish momentum is weakening and that sellers may be losing control at a relatively fast pace.

BUY AUDUSD

EXP

TRADING

0.71436

Entry Price

0.72370

0.70650

0.71387 -0.00313 -0.44%

0.0

Pips

Flat

0.70650

Exit Price

0.71436

Entry Price

0.72370

Friday’s U.S. Consumer Price Index (CPI) report effectively confirmed expectations for a quarter-point interest rate increase at this week’s Federal Reserve meeting. Data released by the U.S. Bureau of Labor Statistics showed that headline CPI rose 0.4% month-over-month in August, accelerating from July’s 0.1% increase. Core CPI also strengthened, rising 0.3% over the same period compared with 0.2% previously, marking its fastest monthly pace in four months.

Meanwhile, the yield on the benchmark 10-year U.S. Treasury note moved above the 5% threshold on Monday for the first time since 2023, gaining more than four basis points as investors increasingly priced in a 25-basis-point rate hike from the Federal Reserve at Wednesday’s policy decision.

The U.S. Dollar Index (DXY), which tracks the value of the dollar against a basket of six major currencies, traded near 99.53, advancing roughly 0.55% on the day and reaching its highest level since September 3.

Higher oil prices are also reinforcing expectations of a hawkish outcome from the Federal Reserve as geopolitical tensions in the Middle East continue to escalate. Supply risks are no longer limited to the Strait of Hormuz and have increasingly extended toward the Red Sea, where Iran-aligned Houthi forces have expanded their presence near the strategically important Bab el-Mandeb shipping route. West Texas Intermediate (WTI) crude traded around $99.00 per barrel, close to levels last seen on May 21, and has gained more than 15% so far this month.

In Australia, Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter stated on Tuesday that the housing market remains one of the key transmission channels for monetary policy. Hunter added that the central bank continues to seek a moderation in both housing activity and broader economic growth as part of its effort to reduce inflationary pressures.

Australia’s Trimmed Mean CPI remained unchanged at 3.6% year-over-year in July, exceeding the RBA’s year-end projection of 3.3%. At the same time, real GDP growth reached 2.1% year-over-year during the second quarter, surpassing the central bank’s estimate of 1.9%. These figures continue to support expectations that the RBA could raise interest rates by 25 basis points to 4.60% at its September 29 meeting, a scenario currently assigned roughly a 70% probability by financial markets.

According to data released by the Australian Bureau of Statistics (ABS), the economy expanded by 0.4% quarter-over-quarter during the second quarter, slightly outperforming market expectations. The result further strengthens the argument for an additional interest rate increase in the near term.

Following the GDP release, traders increased their expectations for a September rate hike, with the implied probability rising to nearly 70%, compared with approximately 50% before the report was published. Bullish Opportunities Emerge as RSI Reaches Extreme Levels_1

Bullish Opportunities Emerge as RSI Reaches Extreme Levels_1

Technical Analysis

AUDUSD appears to be trading within an ascending channel, with the lower boundary of the structure being closely followed by the 200-period moving average, currently located at 0.7117. Meanwhile, the 100-period moving average is positioned near the middle section of the channel around 0.7178. Recently, the pair reacted strongly to the upside after testing the 200-period moving average, which is also aligned with a local support area near 0.7110.

As long as this support zone remains intact and is not decisively broken to the downside, the pair could develop another bullish leg higher toward the upper boundary of the channel. In that scenario, attention would shift toward the local resistance area located near the recent high at 0.7237, which represents the next significant upside objective within the current structure.

Turning to momentum indicators, the Relative Strength Index (RSI) recently declined to 25, moving clearly into oversold territory. More importantly, when compared with previous low RSI readings recorded during earlier stages of the channel, the indicator reached a significantly deeper oversold level despite price trading well above the levels seen at the beginning of the trend. This points to a clear convergence signal, suggesting that bearish momentum is weakening and that sellers may be losing control at a relatively fast pace.

At the same time, the MACD continues to display a bearish histogram, although it is steadily losing depth, indicating a reduction in downside momentum. The signal lines remain firmly positioned around neutral territory, suggesting that additional consolidation may still be required before bullish momentum can fully reassert itself. Until then, the broader structure continues to support the possibility of another upward move if buyers manage to regain control from current levels.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7143

Target price: 0.7237

Stop loss: 0.7065

Validity: Sep 24, 2026 15:00:00

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Bullish Opportunities Emerge as RSI Reaches Extreme Levels

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