AUD/USD plunged through key support at 1.0149 in Asia but the downward momentum has reversed and the pair is at 1.0170 ahead of today’s RBA meeting.

The rebound leaves a mixed signal on the daily chart. The bias is for further losses but it would be an easier call (nothing is easy) on a close below 1.0149.

AUDUSD daily ending March 4, 2013

AUDUSD daily

Fundamentally, the market is understandably cautious ahead of the RBA decision today. Although just 2 of 29 economists surveyed by Bloomberg expect a 25 bps cut, the OIS market is pricing a 32% probability of a move.

If the RBA cuts, the Australian dollar will tumble. If they hold, the knee jerk will be higher but the continued reaction will depend on Stevens’ tone. If he’s hawkish, consider the fall below 1.0149 as a false breakout and look for the pair to rebound to 1.0300/50.