AUD/USD Risks Further Losses on Dovish RBA, Bearish RSI Formation

Reserve Bank of Australia (RBA) to Hold Official Cash Rate during Record-Low of 1.50%.

Will Governor Philip Lowe Show Increased Concern for Low Price/Wage Growth

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Trading a News: Reserve Bank of Australia (RBA) Interest Rate Decision

The Reserve Bank of Australia (RBA) seductiveness rate preference might beget singular seductiveness as Governor Philip Lowe and Co. are widely approaching to keep a executive money rate during a record-low of 1.50%, yet a uninformed collection of executive bank tongue might import on a AUD/USD sell rate should a executive bank prominence a dovish opinion for financial policy.

What’s Expected:

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Why Is This Event Important:

The RBA might sound some-more discreet this time around as officials advise ‘the boost in expenditure enlargement was approaching to be singular given a foresee for resigned enlargement in domicile incomes,’ and Governor Lowe might uncover a larger eagerness to serve support a genuine economy as ‘the factors that had weighed on inflationary pressures could be some-more determined than had been assumed.’ In turn, a RBA might continue to tame interest-rate expectations, with aussie-dollar during risk of giving behind a allege from progressing this year generally as a Federal Reserve appears to be on march to broach a Mar rate-hike.

Expectations: Bearish Argument/Scenario

Subdued salary enlargement accompanied by a slack in tellurian trade inspire a RBA to adopt a some-more dovish tinge in March, and a Australian dollar stands during risk of confronting near-term headwind should a executive bank open a doorway to serve embark on a easing-cycle.

Risk: Bullish Argument/Scenario

However, a ongoing alleviation in a labor marketplace might pull a RBA to prominence an softened opinion for a region, and a process matter might hint a bullish greeting in a higher-yielding banking should Governor Lowe Co. speak down bets for additional financial support.

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How To Trade This Event Risk(Video)

Bearish AUD Trade: Governor Lowe Co. Adopts Dovish Outlook for Monetary Policy

  • Need red, five-minute candle following a proclamation for a brief AUD/USD trade.
  • If marketplace greeting favors a bearish aussie position, sell AUD/USD with dual apart lots.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bullish AUD Trade: RBA Shows Greater Willingness to Move Away From Easing-Cycle

  • Need green, five-minute candle to cruise a prolonged aussie position.
  • Carry out a same setup as a bearish AUD trade, only in a conflicting direction.

If you’re looking for trade ideas, check out a Trading Guides.

Potential Price Targets For The Release

AUD/USD Daily

AUD/USD Daily Chart

Chart – Created Using Trading View

  • Failure to safety a near-term holding settlement raises a risk for a serve decrease in AUD/USD generally as a Relative Strength Index (RSI) turns forward of overbought domain and starts to carve a bearish formation; will watch a former support section around 0.7650 (382.% retracement) for new resistance, with a subsequent downside jump entrance in around 0.7530 (38.2% expansion) followed by 0.7500 (50% retracement).
  • Interim Resistance: 0.7730 (61.8% retracement) to 0.7770 (61.8% expansion)
  • Interim Support: 0.7150 (161.8% expansion) to 0.7180 (61.8% retracement)

Impact that theRBA seductiveness rate preference has had on AUD/USD during a previous meeting

February 2017 Reserve Bank of Australia (RBA) Interest Rate Decision

AUD/USD 5-Minute

AUD/USD Chart

As expected, a Reserve Bank of Australia (RBA) hold a benchmark seductiveness rate during a record-low of 1.50%, yet Governor Philip Lowe Co. sounded a bit some-more confident this time around, with a executive bank observant ‘the alleviation in a tellurian economy has contributed to aloft commodity prices, that are providing a boost to Australia’s inhabitant income.’ Nevertheless, it seems as yet a RBA is in no rush to mislay a accommodative process position as ‘the arise in underlying acceleration expected to be a bit some-more gradual,’ and a executive bank might mostly validate a wait-and-see proceed via a year after delivering dual rate-cuts in 2016. The Australian dollar tracked aloft following a upbeat tone, yet a marketplace greeting was short-lived, with AUD/USD slipping behind next a 0.7650 segment to finish a day during 0.7627.

Read More:

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Technical Weekly: EUR/USD Long Term Chart Conditions Refresher

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March Forex Seasonality Sees Neutral Month for USD After Feb Rebound

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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