The Aussie was slightly higher in late Asian trading after RBA kept interest rates unchanged at record lows but maintained upbeat view and expecting economic growth to pick up in 2019 after slowing in second half of 2018.
The central bank’s policy meeting comes just day ahead of release of Australian GDP data.
According to forecasts, the economy growth is expected to slow to 2.5% in Q4, compared to previous quarter’s 2.8%, which diverges from RBA’s optimistic expectations for 3% growth.
Pessimistic tones prevail in the market, keeping the pair at the back foot and pressuring pivotal support at 0.7070 (Fibo 38.2% of 0.6706/0.7295), already cracked on overnight’s dip to 0.7066, with nervous choppy trading expected to remain until Wednesday’s release. Overall bearish daily techs support the notion, as daily MA’s in firm bearish setup turn lower and started to diverge, while momentum probes into negative territory. Falling thick hourly cloud ( 0.7092/0.7107) continues to pressure and marks initial resistance. Downbeat GDP results on Wednesday would further sour the sentiment and push the RBA closer to rate cut in coming months. Eventual break of key support zone at 0.7070/54 would risk bearish acceleration towards psychological 0.70 support and 0.6931 (Fibo 61.8%) in extension.
Res: 0.7092, 0.7107, 0.7118, 0.7130
Sup: 0.7070, 0.7054, 0.7000, 0.6931
