audusd further potential decline as rba looms 2690212017

Since our last analysis dated on 30 March 2017, the AUD/USD had staged a bearish reaction as expected right at the 0.7680 intermediate resistance and declined towards the first downside target/support at 0.7585 in today (04 April 2017) early Asian session. Click here for a recap on our previous report.

The AUD/USD has managed to stage a rebound right at the 0.7585 support to print a current intraday Asian session high of 0.7615 due to better than expected Australian Trade Balance (3,574 million versus a consensus of 1,800 million).

Later today at 0430 GMT, the Australian central bank (RBA) will meet to decide its monetary policy where the consensus is a no change in monetary policy with the cash rate at 1.5%. There are several factors to watch in the tonality of the momentary policy statement as follow:

• The unemployment data in February came in worse than expected where the unemployment rate rose to 5.9%, the highest since January 2016.
• Retail sales for February stood at 2.9% y/y which continued its fourth monthly consecutive decline in growth since Oct 2016.  If household consumption continues to disappoint, it is likely to dampen earlier RBA’s forecast for acceleration in economic growth.

Therefore, the aforementioned factors may lead to a dovish tweak in the language presented in the monetary policy statement on wage growth and inflation outlook which can translate the further potential weakness in the AUD/USD in the short to medium-term.

Now, let’s us take a look at the latest technical elements.

Short-term technical outlook on AUD/USD

(Click to enlarge chart)

Key technical elements

• After it printed a high of 0.7679 on last Thursday, 30 January 2017, the pair has continued to drop within a minor bearish descending channel in place since 21 March 2017 medium-term swing high. The upper boundary of the descending channel stands at 0.7645 and the lower boundary rests at 0.7515.
• The key short-term resistance now stands at 0.7645 which is defined by the recent minor swing high area of 01 April 2017, the 61.8% Fibonacci retracement of the recent decline from 30 March 2017 high to today’s current Asian session low of 0.7585 and also the upper boundary of the aforementioned descending channel.
• The key short-term support remains at 0.7550 (minor congestion area of 10 March to 14 March 2017 and the 76.4% Fibonacci retracement of the recent up move from 09 March 2017 low to 0.7750 high seen on 21 March 2017) follow by 0.7515 next (1.00 Fibonacci projection of the decline from 21 March 2017 high & the lower boundary of the descending channel).
• The hourly RSI oscillator remains bearish below its resistance which suggests that downside momentum remains intact.

Key levels (1 to 3 days)

Intermediate resistance: 0.7620/30

Pivot (key resistance): 0.7645

Supports: 0.7585, 0.7550 & 0.7515

Next resistances: 0.7680

Conclusion

Given the upcoming fundamental event risk (RBA meeting), the AUD/USD may see a push up first to test the 0.7620/30 intermediate resistance with a maximum limit set at the 0.7645 tightened short-term pivotal resistance for another potential downleg to target the next support at 0.7550 and even 0.7515 next.

However, a break above 0.7645 may negate the preferred bearish scenario for a more pronounced corrective rebound to retest the 0.7680 swing high area of 23 March/30 March 2017.

Charts are from eSignal

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