AUDUSD Nosedives As RBA Cuts Interest Rate

FXOpen

The Australian Dollar (AUD) nosedived against the US Dollar (USD) yesterday, dragging the price of AUDUSD to less than 0.7500, following the Reserve Bank of Australia (RBA) interest rate decision. The technical bias has also turned bearish because of a Lower Low in the ongoing wave.

Technical Analysis

As of this writing, the pair is being traded near 0.7484. A support may be noted near 0.7385, a major horizontal support ahead of 0.7300, the psychological number and then 0.7281, another major horizontal support on the daily chart.

AUDUSD Nosedives As RBA Cuts Interest Rate

On the upside, the pair is likely to face a hurdle near 0.7500, the confluence of horizontal resistance as well as psychological number ahead of 0.7718, the intraday high of yesterday. The technical bias will remain bearish as long as the 0.7835 resistance area is intact.

RBA Interest Rate Decision

The Reserve Bank of Australia on Tuesday cut the cash rate to a record low of 1.75 per cent in a bid to head off falling prices and an economic downturn. The cut, the first in a year, came less than a week after a shock drop in core inflation to well below the central bank’s 2 per cent to 3 per cent target band.

Most economists expect a second cut before the end of the year, although some say the June quarter inflation figure, out in August, will determine the RBA’s next move. Tuesday’s historic interest rate reduction coincides with the federal government’s third budget, which is expected to be mildly stimulatory despite pressure to narrow the deficit.

Trade Idea

Consider the overall technical and fundamental outlook, selling the pair around current levels could be a good strategy in short to medium term.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Stay ahead of the market!

Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.

Latest articles

Analysis of XAU/USD: Gold Price Sets Historical Record
Commodities

Analysis of XAU/USD: Gold Price Sets Historical Record

As the XAU/USD chart shows, on 16th July, the gold price rose above $2460 for the first time in history. The bullish sentiment is driven by:

→ Anticipation of Fed rate cuts, as the appeal of non-yielding bullion generally increases

US Banks Set a Bullish Tone at the Start of Earnings Season
Shares

US Banks Set a Bullish Tone at the Start of Earnings Season

Company earnings reports for the second quarter will be a crucial driver of stock market movements in the coming weeks. Traditionally, the largest banks kick off the earnings season, and their performance indicators today are setting a bullish tone.

For

The Dollar Corrected After a Sharp Decline. Will the Uptrend Resume?
Forex Analysis

The Dollar Corrected After a Sharp Decline. Will the Uptrend Resume?

A sustained decline in the core consumer price index in the US contributed to a sharp pullback in the American currency. The GBP/USD currency pair is trading near the psychological level of 1.3000, EUR/USD buyers are attempting

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.