Australian dollar remains in red for the second consecutive day, with bearish acceleration in early Wednesday, generating an initial signal of reversal, after recovery leg from 0.6563 Mar 10 low, stalled under 100DMA (0.6797).
The Aussie came under increased pressure after the Reserve Bank of Australia stayed on hold on Tuesday, keeping its cash rate unchanged at 3.6% after ten consecutive rate hikes and was further deflated on today’s comments from National Australia Bank.
NAB said it expects that Australia’s interest rate has peaked at 3.6%, from previous forecast of 3.85% which was revised last week from 4.1%, with strong downward revisions within a short period of time.
Economists expects inflation to moderate in coming months that would keep the central on hold, probably until the first half of 2024, when the first rate cut is expected.
Technical picture on daily chart is weakening as 14-d momentum is in steep descend and approaching the centreline and thickening falling daily cloud after yesterday’s twist, increases downside pressure.
Break of 200DMA (0.6748) generated initial negative signal, which was boosted by violation of next pivots at 0.6705/00 (Fibo 38.2% of 0.6563/0.6793 / 10DMA), with close below these levels required to confirm signal.
Bears eye immediate target at 0.6678 (20DMA / 50% retracement), ahead of more significant 0.6651 (Fibo 61.8% / Monday’s low) break of which would confirm an end of 0.6563/0.6793 corrective phase.
Near term bias is expected to remain with bears while the price action stays below 200DMA, which guards upper pivot at 0.6797 (100DMA).
Res: 0.6705; 0.6739; 0.6748; 0.6797
Sup: 0.6678; 0.6651; 0.6617; 0.6589
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