AUD/USD drops 15+ pips after RBA’s inaction

AUD/USD drops to 0.6440 after the RBA left its monetary policy unchanged on early Tuesday. The reason for the Aussie pair’s declines could be traced from the central bank’s downbeat forecasts of inflation and unemployment.

Read: RBA: Will not increase the cash rate target until inflation, employment goals are met

Ahead of the RBA decision, Australian Treasurer Josh Frydenberg said that his government will continue to do what is necessary to support the economy. However, the policymaker failed to provide any clear hints relating to the likely fiscal support.

Earlier during the day, Australia’s AiG Performance of Construction Index and the Commonwealth Bank’s activity numbers printed downbeat figures.

Elsewhere, the Australian Bureau of Statistics recently published the weekly Australian payroll jobs and wages data. As per the details, the total employee jobs decreased by 7.5% whereas the total wages paid by employers slipped by 8.2%.

Even so, the Aussie pair cheered the risk rest following the World Health Organization’s (WHO) comments that it didn’t receive any proofs from the Washington that backs the US allegations on China’s role in virus outbreak.

While portraying the risk-tone sentiment, the S&P 500 Futures register 0.70% gains to 2,845 whereas MSCI’s index of Asia-Pacific shares flashes 0.55% profits.

Moving on, traders will keep eyes on the details of economic projections form the Aussie central bank, as well as trade/virus updates, for fresh impetus.

Technical analysis

On the hourly chart, AUD/USD extends its pullback from 61.8% Fibonacci retracement of late-April upside while staying positive above 200-HMA. Though, 38.2% Fibonacci retracement level around 0.6450 seems to guard the immediate upside before shifting the market’s attention to 100-HMA, at 0.6478 now. Meanwhile, 0.6410 level comprising 50% Fibonacci retracement can offer a nearby rest during the pair’s U-turn ahead of the key Fibonacci support close to 0.6370.