This type of flash fall has helped to understand two things; firstly, against the backdrop of a daily bullish pin bar pattern, a growing number of short term traders seem to be betting for a potential recovery, perhaps back to the 20-day EMA at 1.03 - tested several times on the way down - , although a bumpy road is expected ahead. Secondly, the RBA comments seem to be contingent on increased risks of more rate cuts in order to re-adjust AUD value.
As FXWW founder Sean Lee notes: "I suspect that the short-term market is now caught short and the danger is that we see a short-squeeze during Asian FX market trade. If stocks turn bullish in the region, we could see AUD/USD back up towards 1.0300."
While direct intervention still seems some fair miles away, actually the RBA still crossing the newswires saying: "Australia not comparable to Switzerland – the Swiss faced a clear and credible case for intervention", the interest rate is still a secondary weapon that may potentially be used to impact on the Aussie value.