AUD/USD Drops Back Below 0.7300, Erasing Tuesday’s Gains
The AUD/USD
pair erased all of its Tuesday’s gains on the back of not so dovish RBA
meeting minutes and dropped back below 0.7300 handle as investors now
look forward to minutes from April’s FOMC policy meeting.
The RBA meeting minutes, released on Tuesday, revealed that the central
bank was more inclined to wait for further information before easing
further as it expects inflation to pick-up to 1.5%-2.5% by mid-2018. The
not so dovish minutes dampened expectations of further rate-cuts in the
near-term, boosting the pair beyond mid-point of 0.7300 handle.
The pair, however, reversed all of its gains on hawkish comments from
various Fed members on Tuesday. A similar tone in the minutes might
resurface expectations of a Fed rate-hike, sooner rather than later, and
punish commodity-lined currencies like the Aussie.
From technical perspective, the pair failed to sustain its move back
above 100-day SMA and is now headed back towards the very important
200-day SMA. A follow through weakness below 200-day SMA would now open
room for further near-term pain for the AUD/USD bulls.
Technical levels to watch
On the immediate downside, 200-day SMA near 0.7260-50 region, might
continue to extend some support for bulls, below which the pair seems to
immediately drop towards 0.7210-0.7200 round figure mark support.
Meanwhile on the upside, 100-day SMA near 0.7340 region, closely
followed by 0.7365-70 horizontal zone, now seems to cap immediate upside
for the pair. Only a convincing strength above these resistance levels
might negate the near-term bearish bias.
