The Australian Dollar (AUD) inched lower against the US Dollar (USD) on Wednesday during the Asian session, dragging the price of AUDUSD to less than 0.7600 as bears go for a short-term correction. The technical bias remains bullish because of a Higher Low in the recent downside move.
As of this writing, the pair is being traded near 0.7579. A support may be noted around 0.7500-0.7485, the confluence of a major horizontal support as well as the intraday low of yesterday ahead of 0.7418, the swing low of the latest major downside move as demonstrated in the daily chart given below.
On the upside, the pair is likely to face a hurdle near 0.7637, the intraday high of yesterday ahead of 0.7676, the swing high of the latest major upside rally and then 0.7700, the psychological number. The technical bias will remain bullish as long as the 0.7420 support area is intact.
RBA Monetary Policy
The Reserve Bank of Australia has cut the official cash rate to an unprecedented 1.5 per cent to maintain a downward pressure on the currency and spur sluggish inflation and business investment. As was forecast by most analysts, the board lowered the cash rate by 0.25 of a percentage point from 1.75 per cent on Tuesday. Reserve Bank governor Glenn Stevens said in a statement that “the likelihood of lower interest rates exacerbating risks in the housing market has diminished”. The RBA statement said supervisory measures have strengthened lending standards in the housing market.
Considering the overall technical and fundamental outlook, buying the pair on dips still appears to be a good strategy in short to medium term.