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FOREX: Dovish RBA Tilt Threatens Extension Lower for AUD

FOREX
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  • Monday’s China-linked rally for the Australian dollar was met by a clear pivot for the RBA overnight, prompting a swift turnaround back towards cycle lows for AUDUSD. Despite the enthusiasm to start the week, it was noted that trend conditions remain bearish and resistance at the 20-day EMA continues to cap the pair’s short-term relief rallies well.
  • Bolstering the bearish sentiment, Friday was the first daily close below the 0.6400 mark since November 2023. Multiple lows at 0.6380 this week represent the immediate level of interest, before key support at 0.6350. Below here, attention would be on 0.6259, the 1.00 projection of the Sep 30 - Nov 6 - 7 price swing.
  • Potentially offering more bang for the buck at current levels, AUDJPY still has room to reverse yesterday’s impressive 2% bounce, with yesterday’s lows still well over 100 pips away. The cross has been edging lower following the break of trendline support in late November, drawn from the August lows. Spot has also been respecting Fibonacci retracements well, leaving 94.69 as the most obvious downside target (shown below).
  • AUDNZD is also trading at unchanged levels, however, the cross is consolidating back below 1.1000. As a reminder, Goldman Sachs have recommended selling AUDNZD in anticipation of an RBA pivot, with a target of 1.08 and a stop of 1.1050.
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  • Monday’s China-linked rally for the Australian dollar was met by a clear pivot for the RBA overnight, prompting a swift turnaround back towards cycle lows for AUDUSD. Despite the enthusiasm to start the week, it was noted that trend conditions remain bearish and resistance at the 20-day EMA continues to cap the pair’s short-term relief rallies well.
  • Bolstering the bearish sentiment, Friday was the first daily close below the 0.6400 mark since November 2023. Multiple lows at 0.6380 this week represent the immediate level of interest, before key support at 0.6350. Below here, attention would be on 0.6259, the 1.00 projection of the Sep 30 - Nov 6 - 7 price swing.
  • Potentially offering more bang for the buck at current levels, AUDJPY still has room to reverse yesterday’s impressive 2% bounce, with yesterday’s lows still well over 100 pips away. The cross has been edging lower following the break of trendline support in late November, drawn from the August lows. Spot has also been respecting Fibonacci retracements well, leaving 94.69 as the most obvious downside target (shown below).
  • AUDNZD is also trading at unchanged levels, however, the cross is consolidating back below 1.1000. As a reminder, Goldman Sachs have recommended selling AUDNZD in anticipation of an RBA pivot, with a target of 1.08 and a stop of 1.1050.