AUDUSD – Early Focus on the RBA
Last week AUDUSD rallied 2% from opening levels around 0.6230 on Monday to a Friday close at 0.6355, as tariff fatigue saw FX traders reduce dollar longs across the board into the weekend.
At the start of this new trading week, the direction of AUDUSD is likely to be determined by local events, with the RBA convening early on Tuesday morning (0330 GMT) to potentially cut interest rates for the first time in nearly 4 years.
Just as relevant could be the tone of comments from RBA Governor Bullock in the press conference, which starts at 0430 GMT.
Given the market is currently pricing in around 75bps of total RBA easing for 2025, her views regarding the pace of future cuts will be important, especially if they shift the market outlook either way in this regard.
Also important will be her comments on inflation, employment and the threat of what a potential trade war between the US and Australia’s most important trading partner China, could mean for Australia’s economy moving forward.
Against this backdrop for potential AUDUSD volatility assessing the technical outlook can also be helpful.
Technical Assessment:
Since the start of February AUDUSD has enjoyed a period of strength that has broken above some of its immediate resistance levels.
This has seen a sustained phase of strength materialise from the February 3rd low at 0.6087, a move that has been able to breach resistance marked by the upper extremes of the downtrend channel which has be in place since it registered a high of 0.6942 on September 30th (see chart above), and which was last touched when a high of 0.6331 traded on January 24th.
While this breakout is no guarantee of continued price strength, it does highlight the potential for further attempts to extend recent upside moves.
What are the Possible Resistance Levels to Watch if Further Upside Strength is Seen?
Fibonacci retracement levels can mark resistance areas where there is potential for sellers to be found again. The 38.2% retracement of the September 30th to February 3rd AUDUSD price weakness stands at 0.6414 and may prove to be a possible level that may cap the current advance.
However, if this wasn’t to be the case and successful closing upside breaks were seen, then the higher 50% retracement point at 0.6515 could well become more relevant.
What Supports Should be Monitored if Prices Reverse Back Lower?
Of course, after what has already been a sustained move higher during February, it’s possible that corrections could materialise ahead of the rate announcement, in response to the decision itself or something that is said in the press conference. If that were to be the case then traders may be watching the 0.6302 level, which is equal to half the rally from last week’s low, as the first support.
While this level holds any price weakness, it’s possible further attempts at upside strength could emerge again, however closing breaks below this level might suggest risks are emerging for a more extended phase of price weakness.
Such moves could in turn point to tests of potential support at 0.6264, which is the 38.2% retracement of February’s price strength and if were to give ways, then the next support which stands at 0.6230 (deeper 50% level on chart above), could become relevant.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
At the start of this new trading week, the direction of AUDUSD is likely to be determined by local events, with the RBA convening early on Tuesday morning (0330 GMT) to potentially cut interest rates for the first time in nearly 4 years.
Just as relevant could be the tone of comments from RBA Governor Bullock in the press conference, which starts at 0430 GMT.
Given the market is currently pricing in around 75bps of total RBA easing for 2025, her views regarding the pace of future cuts will be important, especially if they shift the market outlook either way in this regard.
Also important will be her comments on inflation, employment and the threat of what a potential trade war between the US and Australia’s most important trading partner China, could mean for Australia’s economy moving forward.
Against this backdrop for potential AUDUSD volatility assessing the technical outlook can also be helpful.
Technical Assessment:
Since the start of February AUDUSD has enjoyed a period of strength that has broken above some of its immediate resistance levels.
This has seen a sustained phase of strength materialise from the February 3rd low at 0.6087, a move that has been able to breach resistance marked by the upper extremes of the downtrend channel which has be in place since it registered a high of 0.6942 on September 30th (see chart above), and which was last touched when a high of 0.6331 traded on January 24th.
While this breakout is no guarantee of continued price strength, it does highlight the potential for further attempts to extend recent upside moves.
What are the Possible Resistance Levels to Watch if Further Upside Strength is Seen?
Fibonacci retracement levels can mark resistance areas where there is potential for sellers to be found again. The 38.2% retracement of the September 30th to February 3rd AUDUSD price weakness stands at 0.6414 and may prove to be a possible level that may cap the current advance.
However, if this wasn’t to be the case and successful closing upside breaks were seen, then the higher 50% retracement point at 0.6515 could well become more relevant.
What Supports Should be Monitored if Prices Reverse Back Lower?
Of course, after what has already been a sustained move higher during February, it’s possible that corrections could materialise ahead of the rate announcement, in response to the decision itself or something that is said in the press conference. If that were to be the case then traders may be watching the 0.6302 level, which is equal to half the rally from last week’s low, as the first support.
While this level holds any price weakness, it’s possible further attempts at upside strength could emerge again, however closing breaks below this level might suggest risks are emerging for a more extended phase of price weakness.
Such moves could in turn point to tests of potential support at 0.6264, which is the 38.2% retracement of February’s price strength and if were to give ways, then the next support which stands at 0.6230 (deeper 50% level on chart above), could become relevant.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.