AUD/USD Tracks 50-Day SMA Forward of RBA Assertion on Financial Coverage

Australian Greenback Speaking Factors

AUD/USD trades throughout the April vary following the restricted response to the Reserve Financial institution of Australia (RBA) rate of interest determination, and the up to date Assertion on Financial Coverage might do little to sway the change charge because the central financial institution stays reluctant to change gears.

AUD/USD Tracks 50-Day SMA Forward of RBA Assertion on Financial Coverage

AUD/USD continues to bounce alongside the 50-Day SMA (0.7707) following the failed try to check the March excessive (0.7849), and the RBA’s Assertion on Financial Coverage might do little to affect the change charge because the central financial institution retains the present course for financial coverage.

It appears as if the RBA will make the most of its emergency instruments all through the primary half of 2021 because the “Board is ready to undertake additional bond purchases,” however the recent forecasts popping out of the central financial institution might foreshadow a looming change in financial coverage as Governor Philip Lowe and Co. reveal that “the date for closing drawings below the Time period Funding Facility is 30 June 2021.”

In flip, projections for a stronger restoration might generate a bullish response within the Australian Greenback because the “financial institution’s central situation for GDP progress has been revised up additional,” and the decline from the February excessive (0.8007) might change into a correction within the broader pattern quite than a change in AUD/USD conduct because the change charge stays on observe to negate the head-and-shoulders formation from earlier this yr following the failed try to shut beneath the neckline.

On the similar time, the current flip in retail sentiment continues to dissipate to largely mimic the exercise seen in 2020, with the IG Shopper Sentiment report exhibiting 45.00% of merchants at present net-long AUD/USD as the ratio of merchants quick to lengthy stands at 1.22 to 1.

The variety of merchants net-long is 9.18% decrease than yesterday and 0.19% greater from final week, whereas the variety of merchants net-short is 11.56% greater than yesterday and 4.36% decrease from final week. The marginal rise in net-long place comes as AUD/USD stays on observe to negate the important thing reversal sample, whereas the decline in net-short curiosity has helped to alleviate the lean in retail sentiment as solely 40.65% of merchants had been net-long final week.

With that stated, the decline from the February excessive (0.8007) might change into a correction within the broader pattern quite than a change in AUD/USD conduct because the crowding conduct from 2020 resurfaces, and the change charge might make additional makes an attempt to check the March excessive (0.7849) because it bounces alongside the 50-Day SMA (0.7707).

AUD/USD Price Each day Chart

Supply: Buying and selling View

• A head-and-shoulders formation took form as AUD/USD traded to a recent yearly low (0.7532) in April, however the change charge seems to be on observe to negate the important thing reversal sample following the failed try to shut beneath the neckline round 0.7560 (50% enlargement) to 0.7570 (78.6% retracement).
• The Relative Energy Index (RSI)confirmed a comparable dynamic because the oscillator reversed course forward of oversold territory to interrupt out of the downward pattern from earlier this yr, however AUD/USD seems to be caught within the April vary following the failed try to check the March excessive (0.7849).
• In flip, AUD/USD might proceed to bounce alongside the 50-Day SMA (0.7707), however lack of momentum to carry above the Fibonacci overlap round 0.7720 (38.2% enlargement) to 0.7760 (23.6% enlargement) might push the change charge again in direction of the 0.7620 (38.2% retracement) to 0.7640 (38.2% retracement) area, with the following space of curiosity coming in round 0.7560 (50% enlargement) to 0.7570 (78.6% retracement).
• Want a detailed above the overlap round 0.7720 (38.2% enlargement) to 0.7760 (23.6% enlargement) to lift the scope for an additional run on the March excessive (0.7849), with the following space of curiosity coming in round 0.7880 (38.2% enlargement).

— Written by David Tune, Forex Strategist

Observe me on Twitter at @DavidJSong