AUDUSD: A Technical Deep Dive Amid Rate Surprise
01 August 2023
The spotlight in today's technical analysis falls squarely on the Australian dollar to American dollar (AUDUSD) pair, especially after the unexpected monetary policy decision from the Reserve Bank of Australia (RBA). The central bank caught markets off-guard by keeping rates steady at 4.1% when the consensus had been leaning towards a 25 basis points hike. This surprise, undoubtedly a bearish event for the Australian dollar, set off a chain of reactions in the currency markets.
With the Aussie dollar now tumbling and holding the title of the weakest currency for the day, a closer inspection of the AUDUSD chart reveals some noteworthy patterns. Late last week, the currency pair flashed a sell signal as it breached a pivotal horizontal support level at 0.672, vividly highlighted in blue. To add to the bearish momentum, the price also slipped below a midterm uptrend line, represented in black. Both these moves combined gave traders a cue to offload their positions.
The onset of this week presented an opportunity for the price to retest these freshly broken levels as potential resistances. Sellers had the upper hand in this tussle, as evidenced by the price's rejection at these resistances, pushing the pair further down.
At the moment, AUDUSD is delicately perched on a dynamic support line, formed by the lows from June and July, colored in purple. While this support might offer a temporary reprieve, possibly even instigating a minor upward correction, the broader outlook remains somber. Drawing from the recent technical developments and the bearish backdrop provided by the RBA's decision, there's a heightened possibility that the price might breach this purple support line, charting a path to explore new lows soon.