The Reserve Bank of earlier in the change and go to sleep 10%Australia kept rates unchanged yesterday at 4.10%. There were some expectations for a 25 basis point hike (around 60-40 for unchanged vs 25 bp hike). The Reserve Bank of Australia (RBA) said the decision was driven by factors including slowed growth in the Australian economy, easing conditions in the labor market, and uncertainties around household consumption. However, the RBA is considering further tightening of monetary policy as a potential requirement. They added that the holding of rates will allow additional time to evaluate the impact of previous hikes and the overall economic outlook. Although inflation in Australia has peaked, the RBA maintains its strong commitment to returning inflation to its target level and will take the necessary steps to ensure this outcome.
The announcement sent the AUDUSD lower initially, but support buyers against the 100-hour moving average, started the squeeze back to the upside.
That move higher took the AUDUSD above its 100/200 day moving averages near 0.6693. Breaking above those key moving averages should have sent the price higher with a 38.2% retracement at 0.6711 the next target to get to and through. However sellers returned, pushing the price back below the daily moving averages, and today the momentum to the downside increased.
The fall lower today has taken the price back to the near-converged 100 and 200-hour moving averages. Those lows come near 0.6658 (lower green and blue lines in the chart below). The price move lower has stalled near those MAs.
What next?
Support against the 100 and 200-hour moving averages will need to be broken to increase the bearish bias. Conversely, if the level continues to find support against the moving average levels, a rotation back to the 100 and 200-day moving averages would be the key barometer once again (near 0.6693).
So the battle is on. The moving average levels on both the hourly and daily charts are defining the range. Traders will look for a break and run.
This article was written by Greg Michalowski at www.forexlive.com. Source