The Aussie started the year on a bullish note, gaining by almost 4% against the dollar. It then started falling after weak economic data from Australia dampened the prospects of future rate hikes this year. On the other hand, the dollar has been supported, albeit slightly, by the hopes and indications that the Fed will commit to at least two more rate hikes this year.

The Aussie started an upward trend early this month, rising from a low of 0.76400 to the current high of 0.7808.

Yesterday, the Reserve Bank of Australia released the minutes of its previous meeting. The minutes showed that the officials are cautiously optimistic about the economy. Cautious because a few key sectors in the economy are not growing as expected. The officials cited the housing market where investments are declining as the housing market falls in Sydney and Melbourne. They also cited the challenges in the mining sector.

The current rally comes as analysts starts to believe that the RBA could start normalization earlier than analysts expect. A report by Commerzbank noted that it will be unlikely for the RBA to be left alone as other central banks start normalization. They also pointed out that the surge in commodity prices could increase the volumes of exports.

As shown below, the AUD/USD pair seems to have found a floor after completing the Elliot Wave. This means that the current upward momentum is part of the corrective wave, which implies that it could continue for a while. Traders should therefore focus on the Fibonacci level of 0.7950.