The semi-surprise cut by the RBA has sent the AUDUSD below the low last week at 0.7719 and the 0.7700 level which was the low price from July 2009 – the last time the AUDUSD was this low. The pair is trading at the lowest level since May 2009. There is not much support looking back to 2009 until around the 0.7450 level (see chart below).
AUDUSD is below the July 2009 low at 0.7700. Stay below keeps the sellers in control.
The RBA commented that the A$ was above the fundamental value. In December Gov. Stevens commented that a level of 0.7500 was the neutral level. There is no comment on the appropriate level so far today, but the RBA did say that the A$ was above fundamental value give commodity price declines.
AUDUSD tumbles lower with the next target at 0.7633 area.
Looking at the hourly chart, the next target on the downside comes in against the lower trend line connecting the most recent lows from last weeks trading. That comes in at the 0.7634 level currently. I would expect that the bias will remain to the downside, as long as the price does not somehow work it’s way above the 0.7700 -0.7719 levels (Low from 2009 and low from last week). The high print after the initial reaction took the price to a high of 0.7712 – just below the 0.7719 level. This solidifies the level as a resistance area.
The question is how low can it go. The fall from just before the announcement has taken the pair around 153 pips. Last week when the RBNZ softened their tone, the NZDUSD fell around 240 pips over the course of a few days. The EURUSD tumble after the ECB meeting was over 500 pips. The USDCAD immediate rise after there cut went 333 pips and then an additional 400 pips. At 153 pips so far for the AUDUSD, I would expect there is room to roam. Shorts can use the 0.7700-19 as risk now.
AUDUSD tumbles after RBA decision.
