AUD/USD down to test key support near 0.7675 ahead of RBA
- Rejected just below 0.7700
- USTs, USD regain poise.
- RBA to keep policy steady today.
Having faced rejection once again just shy of 0.7700 mark, the AUD/USD pair is seen pushing southwards amid pre-RBA caution trading.
AUD/USD: All eyes on RBA decision
The Aussie looks to breach the key support located near 0.7675, the confluence zone of 5 and 10-DMA, as markets turn cautious in anticipation of a dovish tilt in the language of the RBA’s policy statement, in the wake of Australia’s anemic inflationary pressures.
RBA is likely to leave the key benchmark interest rate at a record low of 1.5% at its monetary policy today. The futures market is now not fully pricing in a move until early 2019, a marked change from a couple of months ago when it was implying a hike by August 2018.
Meanwhile, the spot also came under fresh selling pressure, in response to the renewed buying interest seen around the Treasury yields amid risk-on sentiment, which pushed the US dollar higher across its main competitors
Ahead of the RBA’s policy decision, ANZ analysts cite a few reasons they like buying the AUD in dips: “The AUD has fallen significantly in recent weeks as iron ore underperformed and market rate differentials narrowed. We think that these factors are set to become more supportive again and, alongside positive risk appetite, should drive the AUD higher. The recent move in the AU/US spread is unjustified by the broad economic circumstances and we think that market pricing for the RBA has become too downbeat.”
AUD/USD Levels to consider
Jim Langlands at FX Charts noted: “We could be in for further downside pressure where support will once again arrive at 0.7640/50 and again at 0.7625. A break of this would bring fresh selling which could then see a run towards 0.7600 and eventually to 0.7570. On the topside, resistance will be seen at 0.7700 ahead of 0.7720 and then 0.7740. Given the generally heavy look of the charts, I still prefer to sell into strength. Being Melbourne Cup day, interest will be limited.”