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AUD/USD Failing at Key Technical Levels
Beware of renewed losses in AUD/USD. The Australian dollar off this weekend’s softer industrial production and retail sales reports but it may not be able to ignore tonight’s dovish RBA minutes. When the Reserve Bank last met this month, they surprised the market with a quarter point rate cut that sent AUD to its lowest level in 5 weeks. The central bank’s frustration with the low level of inflation and subdued labor cost growth should make an appearance in the minutes but investors will be combing the report for hints on additional easing. However considering that the rate cut was not discounted by the market a generally dovish tone could be enough to drive AUD back to the day’s lows.
Technically, there’s major resistance above current levels -- the 50% Fib of this year’s rally sits at 0.7350, where we also have the 100-day SMA. The 50-week SMA is at 0.7300 and the 20-week SMA at 0.7330. If resistance at 0.7330 holds, we expect AUD/USD to make a run for support at today’s low of 0.7240, right under the 200-day SMA.