With the U.S. out today, the forex markets have been fairly quiet. The U.S. dollar has managed to rebound against some currencies amid profit-taking from the bears after its recent falls. Tonight, the focus will be on the Reserve Bank of Australia’s last policy meeting minutes. If the minutes convey anything useful then the AUD should move. But it is not because of the RBA minutes why we are looking at the Australian dollar/U.S. dollar (AUD/USD) currency pair today, as this brief report is written mainly for our technically-minded followers.
As I mentioned in my previous AUD/USD article last Wednesday, the Aussie did, in fact, push higher to the noted resistance area around 0.8000 despite poor domestic jobs data. But now that the US dollar is making a comeback, the AUD/USD is drifting back lower as speculators make a more sober assessment of the fundamental situation in Australia. That being, it is still not clear if Friday’s bearish-looking candle was just a reaction off of that key level or a signal that the next leg of the downward move has started.
We may get a better idea once the RBA is out of the way tonight. If 0.7895 or worse even 0.7875 support fails to hold then the sellers may come back and push the units down sharply again. On the other hand, a move above the noted 0.800 resistance level should invalidate the bearish idea. But as we are expecting a broad-based dollar rebound, we think that the AUD/USD’s next move could very well be to the downside. If the Aussie does break lower as we expect, then the next level of support below the noted 0.7875 level is at around 0.7760 area where we also have the 200-day average converging. Below here, 0.7730 is an interesting level to watch because this previously resistance level has not yet been tested as support. So, should price get to 0.7730, we could see a bounce of some sort.