Categories: Technical Analysis

Analyzing AUDUSD ahead of RBA Interest rate decision

The Reserve Bank of Australia has been very aggressive in cutting the official cash rate since past few months due to the shrinking economy.

AUDUSD has suffered the most, and down more than 1000 pips since the first rate cut of the current year from RBA in April 2013.

The official cash rate is now at all-time lows, and below 20, 10 and 5 year average as shown in the chart below. The next RBA policy meeting is scheduled on Tuesday of this week, and it is widely expected that official cash rate would be kept unchanged at 2.5%. There was a 25bps rate cut during the last RBA meeting, and since then there has been no further damaging signs from the data released, which does not encourage RBA to cut the rates further this month. So, market is expecting the cash rate to be kept on hold this time, and will be looking closely to the statement from the RBA.

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In my opinion, RBA would like to wait some more time to have more insight from the data which will be out in the next couple of weeks to analyze the impact of the previous rate cuts. The RBA statement is also expected to be more neutral this time as there were no signs of China deteriorating further, which was one of their main concerns last time.

AUDUSD boosted early this week with improved Chinese manufacturing data and opened the week with a gap of almost more than 40 pips. AUDUSD has been trading in 200-250 pip range from the last couple of weeks as shown the in the chart below. There are major supports just around 8900, and a minor trend line extending from the lows. AUDUSD has series of resistances towards upside starting from 9000, 9050, 9220 and 9290.

If you are looking to trade AUDUSD, then either you can buy from the supports as plotted on the chart or sell at higher levels with a tight stop. If we break 9000 and 9050, then there are high chances that AUDUSD might trade higher aiming upper end of the weekly range.

So, watch closely all the fundamental events this week from Australia, including RBA statement, retail sales, GDP data and trade balance figures. All these events will play an important role for AUDUSD this week.

Trade Safe friends!

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Vladimir Ribakov

Following 11+ years of trading experience, trading my own accounts as well as for hedge funds and brokerages, I have decided to fulfill my destiny and to personally mentor Forex and Commodities traders. When I released the “Broker Nightmare” (software that hides trades from brokers) 8 years ago, I found an overwhelming number of frustrated people who genuinely wanted to learn how to trade the Forex market, but instead found themselves scammed and misled. Over the years I have also release other trading systems based on my trading strategies, and met a lot of people on my worldwide Forex seminars. We’ve formed a close Forex community and we meet once or twice a year in various locations in Europe.