- The AUD is offering despite the shortage of Christmas markets and traders are waiting for the RBA.
- AUD / USD bears are looking to break out of the daily support structure.
The AUD it is higher against the G10 currencies by about 0.3%, and against the dollar, it is up 0.38% at time of writing, having traveled from a low of 0.7700 to a high of 0.7741 so far.
Markets are thin during trading on Monday and ahead of the Reserve Bank of Australia’s policy decision tomorrow (probably without incident).
The RBA is expected to maintain a dovish stance considering the resurgence of Covid-19 cases in Melbourne.
Meanwhile, there hasn’t been much new information for the bank to continue and the pivotal meeting in July should attract more attention.
Employment data for April showed a slowdown in total employment, but the Australian caught an offer due to the reduction in the unemployment rate (to 5.5%), albeit thanks to a lower participation rate.
Meanwhile, some geopolitical tension between Australia and China will also be a concern for the RBA and will hamper investment flows in the currency due to uncertainties.
“We believe the declines in the antipodes are temporary, and we maintain a bullish tactical bias in the coming weeks as we believe the focus will continue on aggressive central bank pivots,” analysts at TD Securities said.
As for China, Australia’s largest trading partner, overnight data was generally bullish despite a slight drop in the manufacturing PMI.
Investors may prefer to focus on expansion for 13 consecutive months, as well as increasing the PMI for services.
AUD / USD technical analysis
We have seen stronger proof of the strength of the M formation as follows:
The price has even broken above the 61.8% Fibonacci, but has so far tested the 78.6% Fibonacci resistance and the confluence with the highly liquid May 27th candle, which would also be expected to act as resistance.
Consequently, there are downside risks and the potential for a new daily bearish momentum to break out of the current daily support structure.
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