Aussie dollar rally likely shortlived

Has the Aussie found a bottom?

The chart of the dollar from Down Under will look bullish to those of a technical bent.

Intraday support levels around US$0.7550-US$0.7600 - five-year lows - were successfully tested on a number of occasions in March and April.

Now the AUD/USD cross - about $0.79 at mid session on Tuesday - is testing the top of the range held since the start of February.

The move higher puts it above the 100-day moving average.

The AUD/USD's 14-day relative strength index, a momentum gauge, is 63, not yet signalling the rally is "overbought".

The latest leg-up for the Aussie came after Glenn Stevens, Reserve Bank of Australia governor, refrained from discussing monetary policy at a symposium in Sydney.

Traders have been used to the central bank talking the currency down.

The Aussie's revival coincides with a bounce off lows for iron ore prices in recent weeks, counteracting concerns about a broader slowdown in Chinese raw material demand as growth in the world's second-biggest economy cools.

In the very short term the next move for AUD/USD should be determined by how the market assesses the Federal Reserve's policy statement on Wednesday.

But Barclays thinks any rally will be shortlived. "[The] AUD/USD upside range break signals room higher towards resistance in the $0.7930/40 area where we would look for signs of a top and move back towards $0.7680."

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