During the upcoming Asian session, the Reserve Bank of Australia (RBA) will be holding its regularly scheduled Interest Rate Decision meeting. However, there is unlikely to be any fireworks from the meeting or the accompanying statement. On March 3rd, the RBA was expected to leave rates on hold as the coronavirus was just beginning to spread its way out of China. However, the Bank cut rates from 0.75% to 0.50%. Less than 2 weeks later, on March 19th, the RBA slashed rates to 0.25% to combat negative economic effects from the coronavirus. The Board said they would not increase the rate until progress is made in employment and they feel inflation will be with in 2-3% target. In addition, Australia began their own Quantitative Easing program and will continue to provide liquidity via repo operations until further notice.

On the day the RBA cut to 0.25%, the AUD/USD reached its lowest point since October 2002, near .5500. It has since bounced near the 61.8% retracement level from the March 9th highs to the March 19th lows just above .6200. There is horizontal resistance bear that area as well. .6200/.6235 will be resistance area for price. There are horizontal resistance areas above at .6314 and .6433.

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On a 240-minute timeframe, AUD/USD moved lower out of a rising wedge formation. First horizontal support is just under .6000 at today’s low near .5980. Horizontal support is just under that near .5950. There is one more area I would consider horizontal support near .5840, before there is room for the pair to test the lows near .5500.

AUD/USD closed over +1.5% today. It seems as if each day traders cling to news of whether the new number of coronavirus cases was higher or lower than the previous day. Over the course of the last 2 days, traders are taking the data as “positive”, hence the S&P 500 was up nearly 7% today. This also helped push AUD/USD higher. The RBA will mostly likely try and “stay the course” until they get more evidence of a global decline in infections before they do anything to interest rates.

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