Market News & Analysis
Could the RBA send the AUDUSD back to GFC levels?
The AUDUSD continues its migration south, due to multiple reasons at the current time. Trade War, USD strength and the RBA are all putting pressure on the AUD. Today’s RBA minutes gave traders no reason to doubt possible future rate cuts. The AUDUSD dropped a healthy rally moving back into the red for a 6th session out of 7 after Monday’s election rally.
The RBA could end up being the biggest issue AUDUSD buyers face and a negative trade outcome between the U.S. and China could add to growth worries and hasten the blow to the currencies value to the USD. The RBA looks likey to cut the official cash rate as early as next month after board members said “a decrease … would likely be appropriate” if the labour market did not improve.
A rate cut or cuts could send AUDUSD back to levels we’ve not seen in a long while. Ignoring this year’s flash crash that sent the AUDUSD back down to .6720 for a brief moment, we’re talking about a continuation of the current daily, weekly and monthly downtrends moving the price back to levels possibly in the GFC area, levels not seen since 2009.
Looking at the weekly chart, price has broken out of a descending triangle continuation pattern this week. With further seller influence like a RBA rate cut, we could see a further decline of 373 pips or more, taking us very close to the .66 round number and back into the GFC price area. (Measured moves are used to give an estimate of a price target after a pattern breakout. They take the width of the pattern and project up or down depending on the pattern and breakout direction.)
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