Following its decision on 7th May, the Reserve Bank of Australia (RBA) opted to maintain the interest rate at 4.35%, despite inflation continuing to decrease at a slower pace than anticipated by the RBA.
“I think we still think they’re reasonably balanced with perhaps a little bit of a signal that we need to be very watchful on the upside,” RBA governor Michele Bullock said.
According to The Guardian, the absence of more aggressive language led to a decline in the Australian dollar.
Specifically, on the morning of 8th May, the AUD/USD rate fell below the 0.657 level, whereas on 7th May, the rate was at 0.664 – a decrease of approximately 1.3% in 30 hours.
Technical analysis of the AUD/USD chart indicates that:
→ The 0.664 level serves as a significant resistance – the price turned down from this level several times since March;
→ The price may continue to decline, staying within the channel shown in red.
Current bearish sentiments point towards a potential decline in the AUD/USD price towards the median line of the red channel. Support may be found around the 0.6555 level, where:
→ The lower boundary of the intermediate rising channel (shown in black);
→ 50% correction level from the bull impulse A→B. → EMA (100).
The near-term fluctuations in the AUD/USD exchange rate (as well as other financial assets denominated in USD) could be influenced by comments from Federal Reserve representatives expected on Thursday and Friday.
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