Could the Bears Push the Aussie Below the Monthly Level 0.6445?
- The Aussie is tumbling ahead of the RBA interest rate decision
- Strong monthly resistance is faced by the AUD/USD
- A war of words between Australia and China due to the pandemic
Daily Time Frame:
As it appears on the daily time frame screenshot, the Aussie was in a downward movement since the beginning of the year.
In Mid-March, the AUD/USD made a pullback to the monthly key level 0.6445.
Using the Fibonacci retracement tool, it is visible that this retracement represents 61.8% of January’s drop which indicates that the price most probably will continue its main direction downward.
Another factor that signals a bearish sentiment is that the price is traded below the 100-SMA.
4 Hr Time Frame:
Lowering the time frame will give us a clear idea of how the Aussie might move in the next few days.
The Aussie made a breakout above the 0.6445 tricking traders that a bullish move will begin. What happened is the price went back below this level and left a false breakout behind plus a breakout of the white trendline.
As you all know a breakout of a trendline is an indication of a reversal, so the AUD/USD is in a downward movement now by entering the negative territory.
A breakout of the 100 SMA downward, we could see a huge drop in the Aussie in the next few days.
Today, the RBA is about to take a decision on whether it might lower the interest rate or keep it as it changes.
A big movement for the Aussie might happen if the governor decides to lower the rate.
Australia’s economy could be affected by the slow economy in China since Australia is their biggest exporter.
China stated a decline in its GDP by 6.8% in the Q1 and the Reserve Bank of Australia might consider this fact.
There has also been a war of words between the Australian and the Chinese diplomats after Australia asked the Chinese government for an inquiry over the origin of the pandemic.
Another point that could leave a significant impact on the Aussie to the U.S. dollar pair is if the United States imposes any tariffs on the Chinese government since they have accused them of mishandling the pandemic outbreak.
Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory but did not dispute U.S. intelligence agencies’ conclusion that it was not man-made.
Considering all these facts and the interest decision today, the Aussie might display huge moves giving the investors which direction the AUD/USD might take in the future.