Australian dollar bearish short-term target at US$0.7020-25 nearly achieved

September 24, 2020 - 1 month ago
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The Australian dollar sinks further on Wednesday following market speculation that the Reserve Bank of Australia will cut its cash rate once again.

On Tuesday, the RBA Deputy Governor Guy Debelle said that Australia’s central bank is assessing various monetary policy options, including currency market intervention and negative rates to meet its inflation and employment goals.

Mr Debelle had also suggested the Reserve Bank is a little uncomfortable with the level of the Australian dollar, saying a lower exchange rate would “definitely be beneficial” for the Australian economy.

Analysts expect the Reserve Bank could cut the cash rate to 0.10% as early as the next board meeting on October 6, coinciding with the release of the federal budget.

The recent break of US$0.7210 initially triggered the decline to the call of US$0.7130-45, which is now closing in on the broader target to US$0.7020-25. Reassess from there.

Although the call is for a lower AUD/USD, we should not discount any renewed upside attempts as it is foreseeable of a potential challenge of US$0.7060-80 before the grand challenge on US$0.7020-25.

Failing to hold here, exposes the lower region of US$0.6900-40.

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