At the regular scheduled meeting on Tuesday, the Reserve Bank of Australia left monetary policy unchanged, keeping the key interest rate at a record low of 0.25%, and the target level of 3-year government bond yield – also at 0.25%.
Thus, the bank’s management took a wait and see attitude to assess the economic consequences of the severe restrictive measures introduced to contain the spread of the coronavirus in the country. This decision by the RBA was expected by market participants, and the Australian dollar reacted with restraint to it. However, at the beginning of the European session, AUD / USD turned to growth again, primarily due to the renewed weakening of the US dollar.
So far, the AUD/USD pair is growing as the AUD is strengthening. But the situation may change if, in the growing trend of world stock indices, another breakdown occurs or the Fed gives a signal to curtail or limit its super-soft monetary policy. Until that happens, the AUD/USD pair will tend to rise further despite reaching a 15-month high.
The breakdown of the resistance level 0.7260 (ЕМА50 on the monthly chart) will create preconditions for further growth towards the resistance levels 0.7500 (Fibonacci level 50% of the correction to the wave of the pair’s decline from the level 0.9500 in July 2014 to the lows of 2020 near the level of 0.5510), 0.7850 (ЕМА144 and ЕМА200 on the monthly chart).
In an alternative scenario, a break into the zone below the support levels 0.7035 (EMA144 on the weekly chart and Fibonacci level 38.2%), 0.7005 (EMA200 on the 4-hour chart) will send the pair to the support level 0.6765 (EMA200 on the daily chart), and its breakout will talk about the final return to the bearish long-term trend of AUD/USD.
The first signal for the implementation of this scenario will be the breakdown of the important short-term support level 0.7130 (ЕМА200 on the 1-hour chart) and the local support levels 0.7100, 0.7077.
So far, positive dynamics prevail, making long positions in AUD/USD preferable. Trading Recommendations
- Sell Stop 0.7075. Stop-Loss 0.7160. Take-Profit 0.7035, 0.7005, 0.6765, 0.6455
- Buy by market. Stop-Loss 0.7100. Take-Profit 0.7210, 0.7260, 0.7500, 0.7850