Correction to Key Zone Could Quickly Reignite Bullish Momentum

Forex

Economic

Summary:

This sharp drop in the RSI formed a lower local trough than previously recorded on the chart despite price holding higher, signaling that sellers are losing strength rapidly and inviting buyers to regain control.

BUY AUDCHF

EXP

TRADING

0.56926

Entry Price

0.57750

0.56300

0.57070 +0.00162 +0.28%

0.0

Pips

Flat

0.56300

Exit Price

0.56926

Entry Price

0.57750

Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser reiterated a hawkish stance, noting that inflation remains too high and that firm monetary policy will be needed to bring price pressures down. He also emphasized that the central bank's objective is to moderate domestic demand to ensure a sustainable return of inflation toward its target band.

At its latest meeting, the RBA held its benchmark interest rate unchanged at 4.35%, aligning with market expectations. However, Governor Michele Bullock maintained a hawkish tone, leaving the door open for potential rate hikes in coming months. The monetary authority also underscored that the Australian economy continues operating above its potential capacity, requiring a slower pace of economic growth to curb inflationary pressures.

On the other hand, the Australian economy delivered a positive surprise in June by posting a larger trade surplus than expected. Data from the Australian Bureau of Statistics showed exports increased 9.6% month-over-month, bouncing back from the previous month's contraction behind a strong surge in raw material shipments. At the same time, imports slid 0.2%, aiding a further improvement in the trade balance.

Nevertheless, inflationary pressures continued to ease. The Consumer Price Index (CPI) slowed to 3.8% year-over-year in June, coming in below market forecasts. This development significantly scaled back expectations for a near-term RBA rate hike, putting downward pressure on the Australian dollar.

In Switzerland, July inflation delivered another downside surprise. The Consumer Price Index slipped 0.1% month-over-month, missing expectations for a flat reading. The primary drag on price growth came from the transportation component, where prices fell 0.4% on the month, contrasting with the 0.6% increase expected by market consensus.

Looking at individual components, domestic prices rose 0.5% year-over-year, while imported goods prices remained unchanged compared to the previous year. This dynamic highlights diminishing pressures from imported energy costs, which had previously driven inflation higher in prior months following Middle East geopolitical tensions.

The Swiss National Bank's (SNB) latest projection places average third-quarter inflation at 0.7% year-over-year. However, recent data points to a milder trajectory, with quarterly inflation tracking near 0.5%—roughly 0.2 percentage points below official forecasts. Declining fuel prices have been a key driver behind this slowdown, and should this trend hold, inflation could keep running below central bank estimates. Correction to Key Zone Could Quickly Reignite Bullish Momentum_1

Correction to Key Zone Could Quickly Reignite Bullish Momentum_1

Technical Analysis

AUDCHF reacted to the upside after testing the local support level at 0.5667, a zone aligning with the 200-period moving average at 0.5682, while the 100-period average sits at 0.5710. For now, recent price action resembles a technical pullback following the local high of 0.5781 printed on August 18; consequently, the upward trend could resume as the current bullish reaction seeks to carry price back toward the 0.5775 resistance zone.

Turning to the oscillators, the RSI reached the 21 level, moving clearly into oversold territory. This sharp drop in the RSI formed a lower local trough than previously recorded on the chart despite price holding higher, signaling that sellers are losing strength rapidly and inviting buyers to regain control. Meanwhile, the MACD shows a bearish histogram that is quickly losing depth, while the signal lines hover around the neutral mark; a crossover into positive territory would accelerate the upside recovery, confirming that this pullback keeps the bullish move favored.

Trading Recommendations

Trading direction: Buy

Entry price: 0.5692

Target price: 0.5775

Stop loss: 0.5630

Validity: Aug 31, 2026 15:00:00

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Correction to Key Zone Could Quickly Reignite Bullish Momentum

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