AUD/USD Daily Forecast – Resistance At 0.7075 In Sight

AUD/USD Video 03.11.20.

Australian Dollar Gains Ground Against U.S. Dollar After RBA Interest Rate Decision

AUD/USD is trying to settle above the nearest resistance level at 0.7075 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has settled below the support at 94 and is trying to develop additional downside momentum. The next support level for the U.S. Dollar Index is located at the 50 EMA at 93.60, and a test of this level will be bullish for AUD/USD.

Today, the Reserve Bank of Australia decided to cut the interest rate from 0.25% to 0.1%, in line with analyst forecasts. In addition, the Bank stated that it would target a 0.1% yield on 3-year Australian government bonds.

Currently, the 3-year Australian government bonds yield about 0.11%. The yield has been trending down since early September so the Bank will not have too much work to do on this front.

Also, RBA stated that it would buy A$100 billion of longer-dated government bonds with maturities of 5 to 10 years over the next months to put additional pressure on their yield.

These steps were expected by the market so the interest rate decision and the subsequent commentary did not put pressure on the Australian dollar.

Technical Analysis

AUD/USD managed to get above the resistance at 0.7030 and is trying to settle above the next resistance level at 0.7075. If this attempt is successful, AUD/USD will head towards the resistance level at the 20 EMA at 0.7090.

A move above the 20 EMA will open the way to the test of the resistance at the 50 EMA at 0.7130 although AUD/USD may also face some resistance near 0.7100.

On the support side, the nearest support for AUD/USD is located at 0.7030. If AUD/USD declines below this level, it will get to the test of the major support level at 0.7000.

A move below the support at 0.7000 will signal that AUD/USD is ready to develop additional downside momentum. In this case, AUD/USD will decline towards the next support level at 0.6975.

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