AUD/USD tests 16-week long support-line as RBA rate-cut looms while it's off in Australia

Sluggish inflation fuelled speculations of an RBA rate-cut in May.
It’s a holiday in Australia, which in turn highlights the US catalysts and risk events.

Anil Panchal FXStreet

AUD/USD is taking the rounds near 0.7010 during initial Thursday when Australian markets are off due to Anzac day. The Aussie slumped to seven-week low during the previous day as sluggish prints of quarterly inflation figures triggered speculations of an imminent rate-cut from the Reserve Bank of Australia (RBA).

Lesser than forecast and prior Australian inflation numbers for the Q1 2019 pushed majority of market players to expect a rate cut from the RBA as soon as the May monthly meeting takes place.
In addition to the Aussie pessimism, sluggish EU numbers, dovish tone of the Bank of Canada (BoC) and Brexit deadlock also added into the US Dollar’s (USD) strength while negatively affecting the risk indicator Aussie.

With the holiday in Australia limiting fresh catalysts, investors may turn to the US weekly jobless claims and monthly prints of durable goods orders to determine near-term trade bias.

Forecasts suggest a small uptick in job numbers with a noticeable improvement in durable goods orders compared to last month's contraction.

Also, latest news suggested that the US lawmakers will head to China for more trade talks and representatives from Beijing will arrive in Washington in early May for the same reason. This suggests fast-moving progress on the US-China trade talks, a positive catalyst for the Aussie.

AUD/USD Technical Analysis

An upward sloping support-line stretched since January 04 around 0.7000 handle becomes a strong support for the quote, a break of which can recall 0.6980 and 0.6900 back on the chart whereas January 2016 lows near 0.6840 may flash on the Bears’ radar then after.

On the contrary, 0.7055, 0.7080 and 50-day simple moving average (SMA) near 0.7110 can entertain buyers during the pullback.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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