The Australian dollar fell back towards last Friday’s new 4 ½ month low on Tuesday, following dovish stance from RBA.
Central bank’s Governor Lowe pointed to rate cut on next month’s meeting that would boost hiring to lower unemployment rate, in attempts to push inflation towards its target levels.
The RBA already lowered its GDP growth forecast, warning of weakening Australian economy.
Fresh easing filled Monday’s gap, after short-lived rally on surprise election results stalled under key barriers at 0.6940 zone (Fibo 38.2% of 0.7068/0.6864 / falling 10SMA), shifting near-term focus back to the downside after Monday’s action ended in long-legged Doji.
Dovish RBA adds to existing negative sentiment as overall picture is bearish.
Bears look for retest of 0.6864 low, violation of which would signal continuation of larger downtrend towards initial support at 0.6845 (Fibo 76.4%) and possible further bearish acceleration as below 0.6845 there are no obstacles on the way towards 0.6706 support 3 Jan spike low).
Caution on oversold daily stochastic which may slow bears.
Res: 0.6893, 0.6913, 0.6932, 0.6942
Sup: 0.6864, 0.6845, 0.6750, 0.6706