AUD/USD Eyes 77 Cents Ahead of RBA

AUD/USD Eyes 77 Cents Ahead of RBA

AUD/USD Eyes 77 Cents Ahead of RBA

The main focus tonight will be on Australia and the Reserve Bank’s monetary policy announcement. At their last meeting the RBA left rates unchanged and said, “Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy.” Investors interpreted these comments to mean discomfort with the current level of the currency and sent AUD tumbling lower as a result. There’s a small subset of investors looking for the RBA to ease this month because CPI declined in the first quarter and activity slowed according to the PMIs. However according to the following table, consumer spending rebounded, business confidence improved, the unemployment rate declined and market indicators ticked upwards. So like many of their peers, the RBA may wait and see how the economy performs in the next month before taking additional action.

Technically the uptrend in AUD/USD remains strong as long as the currency does not close below the 50-day SMA at 0.7540. Resistance is at the March high of 0.7722 and support is at the moving average. If the upside barrier is breached, AUD/USD will aim for its April high. If the moving average is broken, 75 cents will be tested with a possible move down to 0.7450.

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