AUD market caught short; cautious now ahead of RBA
The market did its usual think of getting bearish at the wrong levels and then being forced to run for cover. AUD/JPY re-took the technical pivot at 96.90 despite a falling USD/JPY, which shows just how badly positioned the FX market was. EUR/AUD also fell hard as a long-overdue retracement got underway and AUD/USD starred as it blitzed through heavy trailing stops above .9700.
Today’s big risk event is the RBA decision and whilst they are unlikely to cut again, I still think there is at least a 33% chance that they do. Recent soft data might sway them but the usually hawkish Stevens is more likely to be influenced by rising rates in the US; so ‘no change’ is still the likeliest outcome.
AUD/USD should be well supported now near .9700 and initial resistance comes in at .9840 ahead of the main technical target at .9930 (38.2% retracement of fall from 1.0580).