RBA meeting outcome expected to bring AUDUSD back to a one-month low

The AUDUSD currency pair started the week with a strong decline. Quotes rolled back from the resistance at 0.632 and headed due south towards the support level at 0.62, where the downward movement stopped a month ago. At the start of Tuesday’s trading session, the ‘bulls’ attempted to seize the initiative, but their gains were insignificant. Sellers of the Australian dollar against the US currency are unlikely to ease the pressure on AUDUSD until the price reaches 0.62.

The results of today’s meeting of the Reserve Bank of Australia (RBA) did not provide significant support for the national currency. The regulator, in line with analysts’ expectations, left the key interest rate at 4.1% after February’s cut, but this move cannot be considered hawkish. In her speech, RBA Governor Michelle Bullock did not mention the risks of a new wave of inflation, instead focusing on the uncertainty associated with the slowdown in the global economy and US trade policy.

Adam Boyton of ANZ rings the alarm bell, highlighting the gradual weakening of economic statistics in Australia. In his opinion, a May easing of monetary policy by the RBA is not guaranteed, despite market participants assigning a probability of over 60% to such an outcome. However, Australia’s export-driven economy is heavily dependent on global trade, so if the situation between the US, China, and other countries continues to escalate, the RBA will have to throw its weight around to help the national economy.

Meanwhile, today’s retail sales data confirmed the downward trend in Australian economic activity. The February figure grew by 0.2%, which was worse than both the January result and the experts’ forecast of 0.3%. Notably, almost all the increase in retail sales was driven by food products, while demand for durable goods showed negative dynamics. If the next report follows suit, the chances of an accelerated RBA rate cut cycle will increase, as will the pressure on AUDUSD.

The Stochastic indicator is giving a sell signal for AUDUSD, increasing the likelihood of a decline in quotes. The nearest target for the ‘bears’ is the level of 0.62.

Consider the following trading strategy:

Sell AUDUSD at the current price. Take profit – 0.62. Stop loss – 0.632.