The Reserve Bank of Australia will announce their last rate decision for 2021 with Gov. Lowe largely expected to keep the official rate steady at 0.10%. At the last meeting, the board said that they are "committed to maintaining highly supportive monetary conditions to achieve a return to full employment in Australia and inflation consistent with the target". . They also have promised to not increase the cash rate until "actual inflation is sustainably within the 2 to 3% target range".
Looking at the daily chart above, the price of the AUDUSD has steadily moved lower since the last corrective high on October 29. That high stalled right below the 200 day moving average (green line in the chart above).
Since that peak, the price has trended about 560 pips to the downside. The low was reached on Friday at 0.6992. The low price today reached 0.69935. Those lows stalled within swing lows going back to September 25, 2020 and November 2, 2020 between 0.6990 and 0.7005. Sellers could not get themselves to push below that swing area ahead of the interest rate decision.
The move off the low today took the price up to 0.70538. That happened to be just above the 38.2% retracement of the move up from the March 2020 low (the pandemic low at 0.5509).
As a result, the two technical levels:
- The low swing area at 0.6990 to 0.7005, and
- The 38.2% retracement at 0.70525
Will represent bias defining levels through the interest rate decision. Move below the swing level below would be more bearish and likely lead to further corrective action to the downside. The 50% midpoint of the range since 2020 comes in at 0.67578 cannot be ruled out as a downside target.
Conversely a move back above the 38.2% retracement would have traders looking toward the swing low from August at 0.71057 and the swing low from October/early November at 0.71684.
