The Australian Dollar is trading lower early Friday in reaction to the dovish Reserve Bank of Australia (RBA) quarterly Statement of Monetary Policy (SoMP). In its statement the RBA substantially downwardly revised its growth forecast for GDP. Policymakers also said the probability of a rate hike or rate cut is more evenly balanced than previously thought. They do not see a strong case to move rates in the near-term.
At 00:41 GMT, the AUD/USD is trading .7066, down 0.0037 or -0.53%.
In its GDP forecasts, the RBA now sees 2.8 percent year/year for December 2018, 3.0 percent for December 2019, 2.7 percent for December 2020 and 2.7 percent for June 2021.
Daily Technical Analysis
The main trend is down according to the daily swing chart. It turned down on Friday when sellers took out the last main bottom at .7076.
The main retracement zone is .7079 to .7153. This zone is controlling the near-term direction of the AUD/USD. The market is currently trading on the weak side of this zone, giving it a downside bias. This zone is now resistance.
The short-term range is .6764 to .7296. Its retracement zone at .7030 to .6967 is the next downside target. We could see a technical bounce on the first test of this zone.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the main 50% level at .7079.
A sustained move under .7079 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into the short-term 50% level at .7030, followed closely by the uptrending Gann angle at .7024. Watch for profit-taking on the first test of .7030 to .7024.
Look for an acceleration to the downside if .7024 fails as support. This could trigger a break into the short-term Fibonacci level at .6967.
Although the main trend is down, we could see a counter-trend rally if the buying is strong enough to overcome and sustain a rally over .7079. Short-sellers have to be careful about getting caught on the wrong side of the market because .7153 is the closest upside target.
Please let us know what you think in the comments below.
This article was originally posted on FX Empire
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