AUD/USD (current price: 0.7565)
The Royal Bank of Australia lowered its benchmark rate by 0.25% to 1.75% this morning, in the face of weakening economic conditions. AUD/USD fell below 0.76, more than 150 pips, following today’s announcement, with support zones ahead at 0.75 and 0.741. The Australian Dollar had a volatile week coming into the monetary meeting as last week’s negative inflation release triggered speculation about easier central bank rhetoric, and even an interest rate decrease. The currency hit a new rally high against the USD two weeks above as it rose above the 0.78 level for the first time in more than a year.
Our assessment: The Aussie was still trading in a clear uptrend until today, despite the waning momentum. The RBA decision might trigger a deeper correction, possibly down to the 200-day MA, currently at 0.725.
