AUD/USD remains steady as the markets await the next central bank outcome following the prior session's Reserve Bank of Australia (RBA) outcome. The AUD was under pressure following the RBA’s policy meeting with long-end rates and inflation expectations remaining a focus for markets as the Federal Reserve concludes its two-day meeting. Firstly, the RBA ditched the yield target and amended its forward guidance, but the outcome was dovish all in all as the Board’s statement emphasised it is prepared to be patient. RBA’s Lowe explained that underlying inflation would have to print at 2.5% before the Board would consider lifting the cash rate. As such he saw current market pricing as “not consistent with our reaction function. This followed the RBA discontinuing its yield target while reflecting less confidence about the duration of the 0.1% cash rate. The RBA also flagged the second half of 2023 as the time inflation will be at the mid-point of the target band.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Although oversold RSI conditions probe the immediate downside of the Aussie pair, the bears remain hopeful of breaking the key technical supports the previous day. After confirming a rising wedge bearish chart pattern on the RBA’s verdict to give up the bond yield targeting, the Aussie pair also slipped below a convergence of 100-SMA and an ascending trend line from September 29, around 0.7460. That said, the quote remains on the bear’s radar until crossing the 0.7460 support-turned-resistance. Even so, the lower line of the wedge, around 0.7500 adds to the upside filters before recalling the AUD/USD buyers. In a case where the pair stays strong beyond the 0.7500 threshold, the upper line of the stated bearish formation and October’s peak will lure the bulls around 0.7560. Alternatively, three-week-old horizontal support, near 0.7380, seems live on the AUD/USD pair seller’s radar but any further weakness will be challenged by the 200-SMA level around 0.7360.

AUDUSD taking support of 0.7400

Nov 03 2021