Having taken many down tests at the US$0.6845-55 support, the market bears went in search of stops beneath this level on Friday and managed to print an intraday low of US$0.6812 before rebounding.
As the market slides, traders will now brace themselves for next week’s RBA rate announcement.
Every first Tuesday at the beginning of each month, the Reserve Bank of Australia (RBA) holds its monetary policy meeting and announcement, along with Governor Lowe’s statement at 14:30 (AEST).
Considering the inflationary pressures, the central bank is expected to lift interest rates for the third time in as many months, with 50 basis points expected.
The rate stands at 0.85%, with 50 basis points ‘favoured’ would lock in a 1.35% hike.
The statement afterwards will be vital in the (RBA) next steps.
Based on the technical assessment, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is in negative territory, while the Moving Average Convergence Divergence (MACD) oscillator supports a weak negative bias, while the ADX indicator holds to a bearish trend.
The break of the key support area at US$0.6845 now in the short-term exposes stop-losses.
The next support is viewed at US$0.6775.
Conversely, a New York close above US$0.6860 would negate the bearish sentiment and reinstate the bullish call to US$0.6935-US$0.7000-15.