Currency Analyst since 2010

AUD/USD: at the last defense

AUD/USD slid from yesterday’s high around $0.9250 to the levels in the $0.9170 area. There was no surprise that the Reserve Bank of Australia left its benchmark interest rate on hold at 2.75% and kept dovish tone, so the bulls couldn’t continue correction up.

The RBA said that the inflation outlook allows further easing if needed and that AUD remains at a high level – a hint that the central bank would like to see the national currency lower.

The longer-term technical outlook for the pair remains negative. After AUD/USD fell below $0.9600 (23.6% Fibo of the advance in 2001-2011) and $0.9400/9387 (multi-year reversal area) and closed below the monthly Ichimoku Cloud, downside targets lie at 0.8850 (100-month MA) and $0.8700 (31.2% Fibo). Now the pair’s trading at 38.2% Fibo of the advance in 2008-2011 which together with the recent low at $1.9111 is the last defense ahead of further declines.

Note that AUD/USD is oversold. There’s divergence in MACD and RSI on both H4 and daily charts which mean that there’s a strong possibility of a short squeeze. Watch Australian retail sales and trade balance data on Wednesday (improvement’s expected) as well as the speech of the RBA’s Governor Stevens. Resistance lies at $0.9250, $0.9325 and $0.9400.

Chart. Daily AUD/USD

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