New session lows as the market prepares for a June cut
After dovish comments from RBA Lowe earlier today, the probability of a rate cut on June 4th from the RBA has increased to 73% (from about 50%). That is getting to the point that if they don't do it, the central banks credibility will be hurt.
The AUDUSD fell below the 100 hour MA after the news, and raced lower (see blue line in the chart above).
After a consolidation range over the last 8 or so hours, the price is trading to new session lows and in the process is testing the low from last week at 0.68643. A move below that level opens the door technically for more downside momentum with a lower trend line on the hourly coming in at 0.6839 (see chart above).
A new low would have the pair trading at the lowest low since January 3rd flash crash when the price bottomed at 0.6741 (from Bloomberg - there are many lows most likely depending on your broker/price feed). There is still a long way to go, before reaching that level though.
Risk now?
If the price cannot get below the recent low from last week at 0.68643 we could see more dip buying. Looking at the 5 minute chart below, the pair did trade above the 100 bar MA at 0.6875 (blue line) in the NY session, but could not get to the next targets at the intraday swing highs at 0.68844 area. The 100 bar MA is the closest risk level for shorts now (at 0.6875).
Above that, and traders willl be eyeing the 0.68844 level. That level is now not only swing highs, but is the current 38.2% of the run lower on the Lowe comments. Move above that weakens the trend lower bias today.
The 200 bar MA on the 5 minute is also a topside hurdle that would turn the bias around for the day. That comes in at 0.6888 and moving lower (see green line in the chart below).
