The Reserve Bank of Australia (RBA) headed by Governor Glenn Stevens announced its decision to keep interest rates unchanged at 2.50% as expected. This was enough to keep the Australian dollar’s gains in check for the mean time.
A quick look at the retracements on AUD/USD’s longer-term time frame shows that the pair is nearly completing the last part of its Elliott Wave impulse pattern. There is a falling trend line connecting the highs of the price for the past few months and the Fibonacci retracement levels line up for a test of resistance.
Take note that the resistance area also lines up with a former support zone right around the .9000 major psychological level. With stochastic on most longer-term time frames indicating overbought conditions, the pair looks prime for a move down south.
AUD/USD Price Forecasts
Further declines for AUD/USD could take it back down to the .8650 minor psychological support zone around its previous lows for this year. A stronger selloff could lead to the creation of new lows, as RBA Governor Stevens has previously mentioned that he’d like to see this forex pair trade around the .8500 mark.
Heightened tensions between Ukraine and Russia are keeping risk trades off the table for now, and this supports further losses for the AUD/USD pair. A resolution of the conflict might lead to a quick bounce if traders book profits on their shorts around current levels but the resistance at the .9000 mark seems strong at the moment.
Other technical indicators such as RSI and ADX are also reflecting the stronger odds of a drop for the AUD/USD pair, as the downtrend has been holding for months already. It would take a strong market catalyst or a complete shift in sentiment to trigger an upside break and there appears to be no risk of that anytime soon.
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