Traded to the lowest level since March 2009 on Friday
The AUDUSD raced to the lowest level since March 2009 last week (and also through teh earlier February lows as well).
The run to the downside reached 0.6433 on Friday before rebounding into the week's close The pair closed at around 0.6510. We are currently trading at 0.6533, up about 13 pips from the Friday close.
The Reserve Bank of Australia will announce their interest rate decision in the new trading day with expectations for a 25 basis point cut to 0.50%. There are expectations for an additional 25 BP cut by June. That should keep the AUD offered all things being equal. The problem is, the rumblings are that the US will also cut rates shortly in response to the risks from the coronavirus.
Technically, the price of the AUDUSD has rebounded higher today and in the process, moved briefly above the falling 100 hour MA earlier in the session (blue line in the chart above). The break above was a step in the bullish direction. Last week, on Thursday and Friday, the pair stalled against the 100 hour MA and rotated back lower. Today's break got above the level, but momentum could not be sustained and the sellers have reentered - pushing the price to a NY session low of 0.65118. That is just above the close from Friday. The 100 hour MA above, and the corrective low to the close from yesterday, have helped define an intraday range.
What to eye through the RBA decision?
The close levels to watch through the meeting on the topside include:
- Getting and staying above its 100 hour moving average at 0.6551 currently.
- A short distance above that is a topside trend line connecting highs from February 21 February 25 and February 27. That trend line cuts across at 0.6565 currently (see red numbered circles)
- The 200 hour MA at 0.65858 would be the next upside target (see green line). The price tested that moving average back on February 19 and last traded above it on February 17th. The 50% retracement of the move down from the February 12 high comes in at 0.6591. That combined with the 200 hour moving average makes the 0.65858-912 area a key area to get above if the buyers are to take more control (see yellow area).
On the downside, the 0.6510 close area from yesterday is the first level to get below for a tilt back to the downside. Not only was it the close, but the swing lows from the Asian and NY session were just above that level.
Below that level opens the downside for more selling potential with the low from today at 0.6461 and the lowest low going back to 2009 at 0.6433 the next downside targets.
With the central banks all potentially in easy mode, the weakness in the AUD may not have the advantage it once had (absent a potential US cut). As a result, the price action and technicals will have to be relied on to give directional clues. Right now, with the price is still below its 100 hour moving average and trendline over the last 6 or so days, the sellers remain more in control. However there is some positive from the move higher in trading today for the pair. So watch the levels outlined and should there be a break higher or lower on the news, there should be follow through momentum in the direction of the break.
