3 Jul 2013
EUR/AUD aided by ascending trendline, RBA dovish tone
FXstreet.com (Barcelona) - The EUR/AUD exchange rate is quoted just below 1.42 after the pair managed to recover half the losses incurred during the last July 1, when a bear correction took the rate from 1.4275 to 1.4131.
EUR/AUD poised for deeper correction?
The ability to hold and close above the 1.4275, last swing high, is now critical to extend the upside scope towards trend highs at 1.44. Short term, the EUR/AUD has been aided by a technical ascending trendline coming from July 1 US lows. Pressure to erode the dynamic support line may be indicative of an extension lower until 1.4150 support - July 1 low, June 28 high - is met.
RBA likely to cut rates further
As soon as yesterday's decision by the RBA to leave rates unchanged at 2.75% was published, the market rushed to priced back more chances of another rate cut in the coming months, thus the broad-based AUD weakness seen.
According to Greg McKenna, Founder at GlobalFX, "Looking first at the Aussie dollar it is clear that the RBA is going to cut rates once again and are going to get the biggest bang for their bucks by talking about it until it is absolutely necessary and in doing so they clearly are hoping that this obvious easing talk has the desired effect of driving the Aussie dollar under 90 cents."
RBA punch dovish line
The key line from the RBA statement yesterday was: "The Australian dollar has depreciated by around 10 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster are balancing of growth in the economy..." This is suggestive that the Central Bank sees no impediment on a cheaper Australian Dollar to resume its easing practices. RBA also added the familiar line "The Board judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand."
EUR/AUD poised for deeper correction?
The ability to hold and close above the 1.4275, last swing high, is now critical to extend the upside scope towards trend highs at 1.44. Short term, the EUR/AUD has been aided by a technical ascending trendline coming from July 1 US lows. Pressure to erode the dynamic support line may be indicative of an extension lower until 1.4150 support - July 1 low, June 28 high - is met.
RBA likely to cut rates further
As soon as yesterday's decision by the RBA to leave rates unchanged at 2.75% was published, the market rushed to priced back more chances of another rate cut in the coming months, thus the broad-based AUD weakness seen.
According to Greg McKenna, Founder at GlobalFX, "Looking first at the Aussie dollar it is clear that the RBA is going to cut rates once again and are going to get the biggest bang for their bucks by talking about it until it is absolutely necessary and in doing so they clearly are hoping that this obvious easing talk has the desired effect of driving the Aussie dollar under 90 cents."
RBA punch dovish line
The key line from the RBA statement yesterday was: "The Australian dollar has depreciated by around 10 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster are balancing of growth in the economy..." This is suggestive that the Central Bank sees no impediment on a cheaper Australian Dollar to resume its easing practices. RBA also added the familiar line "The Board judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand."