AUD/USD slumps below the 50-day EMA to the 0.6880 area
- AUD/USD trims its earlier losses as the Reserve Bank of Australia policy decision looms.
- The Reserve Bank of Australia is expected to raise rates by 25 bps to 3.35%.
- AUD/USD Price Analysis: Shifted downward biased as bears eye 0.6800.
The AUD/USD extended its fall since last Friday's solid US jobs report, augmented speculations that the US Federal Reserve (Fed) might increase rates above market players' expectations for a peak of 5%. Of late, the Australian Dollar (AUD) has trimmed some of those losses vs. the US Dollar (USD), as a monetary policy decision of the Reserve Bank of Australia (RBA) looms. At the time of writing, the AUD/USD is trading at 0.6883.
US data from the last week boosted the US Dollar
Wall Street continued to portray a risk-off impulse. The AUD/USD rebounded at daily lows of 0.6855 and is testing the 50-day Exponential Moving Average (EMA) at 0.6893.
The US Bureau of Labor Statistics (BLS) revealed that Nonfarm Payrolls for December surged by 517K jobs, blowing forecasts for a gain of almost 200K, while the Unemployment Rate dived to a 53-year low to 3.4% from a 3.5% previous month. Consequently, money market futures had priced the Federal Funds Rate (FFR) to be lifted to 5.25%-5.50%, per World Interest Rate Probabilities (WIRP).
The Australian economic docket will feature the Reserve Bank of Australia (RBA) monetary policy decision on Tuesday, February 7, at 03:30 GMT. Most analysts estimate the RBA would raise rates by 25 basis points (bps) to 3.35% and would update its forecasts at the meeting. Those would be available once the Statement of Monetary Policy (SoMP) is revealed on Friday.
Meanwhile, the US economic docket will feature Fed speaking led by Chairman Jerome Powell and Fed Governor Michael Barr. Data-wise, the US Trade Balance would be featured.
AUD/USD technical analysis
With the AUD/USD failing to crack the 200-day Exponential Moving Average (EMA) and the 100-day EMA, each at 0.7144 and 0.7016, the pair shifted from neutral to downward biased. As the major extended its losses below the 50-day EMA, it would accelerate the downtrend toward the 0.6800 figure, but firstly, AUD/USD sellers need to clear the 20-day EMA at 0.6820.
As an alternate scenario, if the AUD/USD reclaims 0.6900, a test of the 100-day EMA at 0.7016 is likely, though to reach the 200-day EMA, it would need a surprise by the Reserve Bank of Australia (RBA).
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
