The Australian Dollar is trading lower shortly before the release of the Reserve Bank of Australia’s (RBA) interest rate decision and monetary policy announcement. The RBA is widely expected to leave its benchmark interest rate unchanged. However, traders seem to be betting on a dovish tone in the policy statement. Some investors believe the central bank will remain neutral, counting on the strong labor market to pull it through the current economic slowdown.
At 03:21 GMT, the AUD/USD is trading .7109, down 0.0005 or -0.06%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through .7168 will signal a resumption of the uptrend. A move through .7041 will change the main trend to down.
The minor trend is down. This is driving the momentum. A trade through .7133 will change the minor trend to up and shift momentum to the upside. A move through .7064 will reaffirm the downtrend.
The AUD/USD is also caught inside a pair of retracement zones that have been causing a choppy, two-sided trade for nearly three months.
The major retracement zone at .7079 to .7153 is controlling the longer-term direction of the AUD/USD. The short-term range is being controlled by the retracement zone at .7105 to .7129.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD on Tuesday is likely to be determined by trader reaction to the 50% level at .7105.
Bullish Scenario
A sustained move over .7105 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into a resistance cluster at .7128 to .7129.
Taking out .7129 will lead to a test of .7133. This could trigger an extension of the rally into a downtrending Gann angle at .7148 and the main Fibonacci level at .7153. This is the last potential resistance level before the .7168 main top.
Bearish Scenario
A sustained move under .7105 will signal the presence of sellers. This could drive the AUD/USD into a pair of uptrending Gann angles at .7088 and .7079.
Taking out .7079 could trigger an acceleration to the downside with the next major targets .7064 and an uptrending Gann angle at .7046. The latter is the last major support before a 50% level at .7030.