Bearish AUD/USD Series Warns of Further Losses Ahead of RBA Meeting



Australian Dollar Talking Points

AUD/USD shortly approaches the 2018-low (0.7203) because the Reserve Bank of Australia (RBA) strikes a cautious tone forward of the subsequent assembly on September 4, and up to date worth motion highlighting the danger for an additional decline within the trade charge because it extends the collection of decrease highs & lows from earlier this week.

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Bearish AUD/USD Series Warns of Further Losses Ahead of Reserve Bank of Australia (RBA) Meeting

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The RBA’s up to date company plan for 2018/2019 seems to be dragging on the Australian dollar because the central financial institution warns ‘excessive debt ranges may complicate future financial coverage selections by making the economic system much less resilient to shocks.’

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It appears as if the RBA is in no rush the raise the official money charge (OCR) off of the record-low as ‘household revenue has been rising slowly and debt ranges are excessive,’ and Governor Philip Lowe & Co. could proceed to endorse a wait-and-see method forward of 2019 election as ‘the low stage of rates of interest is constant to assist the Australian economic system.

With that stated, the RBA could make the most of the September assembly to tame bets for larger borrowing-costs, and the uncertainty surrounding the fiscal outlook paired with the extra of the identical from Governor Lowe & Co. could proceed to sap the attraction of the Australian greenback because the central financial institution retains the door open to additional assist the economic system. In flip, the broader outlook for AUD/USD stays tilted to the draw back as each worth and the Relative Strength Index (RSI) proceed to trace the bearish developments from earlier this yr, with the September opening vary largely in focus because the trade charge comes up towards near-term assist. Sign up and join DailyFX Currency Analyst David Song LIVE for a chance to focus on potential commerce setups.

AUD/USD Daily Chart

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  • Recent collection of decrease highs & lows raises the danger for an additional decline in AUD/USD, with a detailed under the 0.7180 (61.8% retracement) to 0.7230 (61.8% growth) area opening up the subsequent draw back space of curiosity round 0.7090 (78.6% retracement) to 0.7110 (78.6% retracement).
  • However, one other failed try to interrupt/shut under the Fibonacci overlap could generate range-bound circumstances, with the primary topside hurdle coming in round 0.7320 (50% growth) to 0.7340 (61.8% retracement) adopted by the 0.7400 (38.2% growth) deal with.

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— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.


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