AUD/USD drops to fresh weekly lows below 0.7500 on dovish RBA


  • AUD/USD sold-off into RBA’s dovishness despite opening doors to rate hikes.
  • Pre-Fed anxiety weighs on global stocks, souring the market mood.
  • A broadly subdued US dollar keeps the aussie’s downside cushioned.

AUD/USD is consolidating the steep losses near weekly lows of 0.7470, as the sentiment around the Australian dollar was hurt by the Reserve Bank of Australia (RBA) monetary policy decision.

Succumbing to the global policy unwinding pressure and rising inflation fears, the Australian central bank abandoned its 2024 April bond yield target at 0.1% while keeping the Official Cash Rate (OCR) at a record low of 0.1%.

Although the decision may appear hawkish, the central bank Governor Phillip Lowe tried his best to keep the doves happy. Lowe said, it was still “likely to take some time” for inflation to sustainably return to its target, which knocked off the short-term Australian government bond yields, reflective of the easing bets for aggressive tightening.

The aussie dollar bore the brunt of the falling short-term yields and dropped sharply against the US dollar. The divergent monetary policy outlooks between the Fed and RBA is back in play, exerting downward pressure on the major.

Meanwhile, the US dollar licks its wounds after Monday’s decline, as investors reposition their USD bets ahead of the critical US Federal Reserve (Fed) policy meeting, commencing later on Tuesday. The Fed is widely expected to announce tapering at its November meeting and could hint at sooner than expected rate hikes to counter the inflationary risks.

In the meantime, investors will continue weighing in the RBA decision while closely following the risk trends amid a data-light US docket.

AUD/USD technical levels to consider

AUD/USD

Overview
Today last price 0.7474
Today Daily Change -0.0050
Today Daily Change % -0.66
Today daily open 0.7525
 
Trends
Daily SMA20 0.7426
Daily SMA50 0.7354
Daily SMA100 0.7387
Daily SMA200 0.7557
 
Levels
Previous Daily High 0.7537
Previous Daily Low 0.7485
Previous Weekly High 0.7557
Previous Weekly Low 0.7463
Previous Monthly High 0.7557
Previous Monthly Low 0.7191
Daily Fibonacci 38.2% 0.7517
Daily Fibonacci 61.8% 0.7505
Daily Pivot Point S1 0.7494
Daily Pivot Point S2 0.7464
Daily Pivot Point S3 0.7442
Daily Pivot Point R1 0.7546
Daily Pivot Point R2 0.7568
Daily Pivot Point R3 0.7598

 

 

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