AUD/USD is down 1% on the day now to a low of 0.6950 and is threatening a further fall after the RBA rate decision earlier. The central bank delivered a 50 bps rate hike as expected but made a subtle change to their forward guidance by stating that they were not going to be on a pre-set path moving forward.
That hints at the potential for the tightening cycle to slow down and is dragging the aussie lower. Much like the Fed last week, the RBA seems to be one of the first few central banks to be angling towards that – at least in a more clear and concise manner. AUD/USD is being pressured on the day and here’s a look at the daily chart:
The drop today also comes after the pair managed to hold a daily break above 0.7000 yesterday but buyers fell short of testing the 61.8 Fib retracement level at 0.7053. The return back below the figure level is a major blow to the upside push as sellers are also looking to threaten to seize near-term control:
The 200-hour moving average (blue line) at 0.6956 is in focus now and a break below that will see the near-term bias turn more bearish for the pair. That will put the spotlight on short-term support around 0.6911-13 before pushing back towards the 0.6900 level.
Given the subtle shift by the RBA, one can argue that the aussie is going to find it hard to depend on policy tailwind from the central bank to push it higher from hereon. Risk rallies are just about the only thing the currency can depend on and today’s negative sentiment amid US-China tensions is just compounding the aussie’s drop at the moment.