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09:03, 30 juillet

Daily Analysis

In the last week the AUDUSD has fallen sharply from above 0.7050 down to a five week low near 0.69, as it has its eyes firmly on the solid support level at 0.6850. It was only a week earlier that the AUDUSD surged strongly back up to the current key level of 0.7050 as it then looked poised to threaten this level and possibly move higher. Two weeks earlier it tested the level as it reached a seven week high on the back of a steady climb higher over three weeks as it moved from support at 0.6850. This level has helped prop up the currency pair twice in the last two months and is close to being called upon again to support the AUDUSD.
In the middle of June it did drop sharply to its lowest levels for 2019 pushing through any support around 0.6850 for a short period of time before being bought up again. If the support at 0.6850 stands firm and supports prices yet again, then the AUDUSD will continue to be content to trade within the range between 0.6850 and 0.7050.

Despite several attempts, the AUDUSD has been unable to move back above the 0.7050 level as it is now offering resistance and preventing it from returning to its range above 0.7050. In mid-April, the AUDUSD crept higher and pushed through the resistance at 0.7150 to reach a six week high near 0.72, however it then fell sharply over the next four weeks down to the four month low.

Back at the end of February, the AUDUSD fell from near 0.72 down to its lowest levels in two months at 0.70 before a healthy rally. Throughout most of March and April the AUDUSD traded within a range between 0.7050 and around 0.72, although this tightened a little with the resistance around 0.7150. The 0.7050 level remains key as it supported the currency pair several times and very well since October 2018.

Earlier this month the Reserve Bank of Australia (RBA) delivered the first back-to-back interest rate cut since 2012 today and set a new record low cash rate of 1% as it continues to try and ignite economic growth.  However, since that time the RBA have indicated that interest rates would remain low for "an extended period" and the market began pricing in expectations of further cuts to the RBA's already record-low cash rate.  "If demand growth is not sufficient, the board is prepared to provide additional support by easing monetary policy further," he said.  "However, as I have discussed on other occasions, other arms of public policy could also play a role in this scenario."  Then there was talk of lowering the RBA’s long-time inflation target range of 2% - 3%.  "Lowering the target might have the short-run advantage of allowing us to say we have achieved our goal, but shifting the goalposts hardly seems a good way to build long-term credibility," he said at a lunch in Sydney.  "Shifting the goalposts could also entrench a low-inflation mindset."