The Australian Dollar is trading higher late Wednesday following Tuesday’s policy meeting where the Reserve Bank of Australia (RBA) left interest rates at 0.75%, and a keynote speech by RBA Governor Lowe early Wednesday were he discussed the benefits of further monetary stimulus.
According to Lowe, the board is continuing to discuss the merits of further stimulus, saying there would be a stronger case for easing if unemployment trends higher and inflation stays low. He also stated the recent inflation and jobs data show that things are moving in the right direction if gradually, reiterating that the economy is at a gentle turning point.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="At 20:50 GMT, the AUD/USD is trading .6746, up 0.0006 or +0.09%.” data-reactid=”13″>At 20:50 GMT, the AUD/USD is trading .6746, up 0.0006 or +0.09%.
Lowe also emphasized that interest rates are already low and the board has to balance the costs of very low interest rates. Overall, Lowe stated that the potential benefits of easing at the moment do not outweigh the risks.
Daily Technical Analysis
The main trend is down according to the daily swing chart, however, momentum shifted to the upside with the formation of the closing price reversal bottom on February 4 at .6679 and its subsequent confirmation on Wednesday.
This chart pattern does not indicate a change in trend, but it can fuel a 2 to 3 day counter-trend rally. Often the target is a short-term 50% to 61.8% retracement area.
The main trend will officially change to up on a trade through .6934, while a trade through .6679 will negate the closing price reversal bottom and signal a resumption of the downtrend.
The short-term range is .6934 to .6679. Its retracement zone at .6807 to .6837 is the first upside target area.
Based on Wednesday’s price action and the current price at .6746, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the long-term uptrending Gann angle at .6726. This angle provided support earlier in the session.
The next potential upside target is a resistance cluster at .6781 to .6782. Sellers could come in on the first test of this area. However, taking out the angle at .6782 could trigger an acceleration into the short-term 50% level at .6807.
On the downside, a sustained move through .6726 will indicate the presence of sellers. This forms a potential support cluster with the minor 50% level at .6727. If this area fails as support then look for the selling to possibly extend into .6679 and .6671.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This article was originally posted on FX Empire” data-reactid=”35″>This article was originally posted on FX Empire
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