rba interest rate decision day audusd potential final short term push up to 0 75957650 key resistanc

The Reserve Bank of Australia (RBA) will announce its latest monetary policy decision later today at 0430 GMT. Policy makers have cut its key benchmark cash rate to 1.75% to a record low on the May meeting due to a weak Q1 core inflation data as inflation has eased to 1.3% y/y versus 1.7% seen in Q4 2015 (click here for our last update on RBA Interest Rate Decision Day report).

Markets have only priced in the odds of a July cash rate cut of around 12% based on swaps data as reported by Bloomberg which has been reduced from a probability of 40% seen in the wake of the Brexit vote on 24 June 2016. All the economists surveyed by Bloomberg expect no change in the cash rate later as RBA will adopt a wait and see approach on the external risks that arise from Brexit.

Let us take a look at the potential short-term movement on the AUD/USD from a technical analysis perspective.

AUD/USD

(Click to enlarge charts)

Key elements

• On the short-term since the low of 0.7141 printed on 24 May 2016, the AUD/USD has been trading in a ascending range configuration within a long-term bearish configuration below the 0.7902 long-term pivotal resistance.
• The upper boundary of the short-term ascending range stands at 0.7710 with is just below the a Fibonacci cluster of 0.7595/7650
• The AUD/USD is now being supported by a short-term ascending trendline (depicted in dotted green) in place since 28 June 2016 (post Brexit) now at 0.7465 (see 4 hour chart).
• In conjunction, the 4 hour RSI oscillator still shows upside potential before reaching an extreme overbought level which suggests that short-term upside momentum of price action remains intact.
• The lower boundary of the short-term ascending range rests at 0.7410

Key levels (1 to 3 days)

Pivot (key support): 0.7465

Resistances: 0.7595/7650 & 0.7710

Next supports: 0.7410 & 0.7260/25

Conclusion

Short-term technical elements are still positive but do note that on the longer-term the AUD/USD is still evolving within a bearish configuration. For now as long as the 0.7465 short-term pivotal support holds, the AUD/USD may see a potential final push up to target the 0.7595/7650 resistance and even 0.7710 (upper boundary of  the ascending range) before another downleg materialises

On the other hand, a break below the 0.7465 short-term pivotal support, the AUD/USD is likely to see a decline towards the supports of 0.7410 follow by 0.7260/25 (ascending trendline in place since 20 January 2016).

Charts are from eSignal

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