Baxia Markets
June 18, 2024

AUDUSD Tests Key Resistance as RBA Holds Rates Steady at 4.35%

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The Australian Dollar (AUD) trades on a stronger note on Tuesday during the press conference following the release of the June monetary policy decision. The Reserve Bank of Australia (RBA) held the Official Cash Rate (OCR) steady at 4.35% for the fifth consecutive meeting. The last increase was a 25 basis point (bps) hike in November 2023. Following this announcement, AUDUSD is attempting to test key resistance levels where a bearish engulfing candlestick was previously noted. This effort has formed an ascending channel, highlighted in red. The key level resistance, about 15 pips wide, aligns with the upper side of the value area colored in pink. A break above this value area may indicate bullish sentiment. Currently, the price is trading within the value area, suggesting a sideways market trend despite the unchanged interest rate. However, this sideways movement has a trend.image-png-Jun-18-2024-10-20-16-8235-AM
Several indicators reinforce the bearish sentiment. The 50-day Exponential Moving Average (EMA) is positioned below the 200-day EMA. Additionally, the Kijun-sen, Tenkan-sen, and Chikou span remain below the Ichimoku cloud. A bullish reversal could become likely if any of these indicators change their positions. A recent test for a breakout failed as the CPI data from the European Economic Area (EEA) came in lower than forecast but still higher than the previous figure. Despite the CPI data meeting expectations, the market reacted with a bearish engulfing pattern recently.

Moreover, the inflation rate and core inflation rate met expectations. If the market breaks below the ascending channel line, it could signal a continuation of the bearish trend, especially if the Tenkan-sen crosses below the Kijun-sen line. Despite these bearish signals from major technical indicators, minor indicators like the MACD and RSI are suggesting a bullish market. When minor indicators contradict the major ones, it often suggests a correction or pullback. A full reversal would require both sets of indicators to align in sentiment.

Currently, the market on a 1-hour timeframe is trading sideways or in a pullback. This situation could present an opportunity to continue shorting the market, provided it is supported by technical and fundamental factors. Another high-impact economic event on the horizon is the US retail sales data. Economists forecast slower retail sales growth at 2.8% compared to the previous 3%. If upcoming key events yield mixed outcomes, there is still a likelihood for AUDUSD to continue its pullback higher.

Key Takeaways

  1. RBA held the Official Cash Rate at 4.35% for the fifth consecutive meeting.
  2. AUDUSD is testing key resistance levels within an ascending channel.
  3. Major technical indicators show bearish sentiments despite minor bullish signals.
  4. European CPI data came in lower than forecast but higher than the previous figure.
  5. US retail sales data forecasted to slow, potentially impacting AUDUSD's pullback.

Key Economic Releases to Watch Today


Time (GMT) Currency Event Importance Actual Forecast Previous
07:10 AUD RBA Connolly Speech Medium      
08:00 USD Fed Cook Speech Medium      
11:30 AUD RBA Interest Rate Decision High 4.35% 4.35% 4.35%
12:30 AUD RBA Press Conference Medium      
16:00 EUR ZEW Economic Sentiment Index High 47.5 50 47.1
16:00 EUR ZEW Economic Sentiment Index Medium 51.3 47.8 47.0
16:00 EUR Inflation Rate YoY Final High 2.6% 2.6% 2.4%
16:00 EUR Core Inflation Rate YoY Final High 2.9% 2.9% 2.7%
16:00 EUR Inflation Rate MoM Final High 0.2% 0.2% 0.6%
16:00 EUR CPI Final High 126.31 126.32 126.04
19:30 USD Retail Sales MoM High   0.2% 0%
19:30 USD Retail Sales Ex Autos MoM Medium   0.2% 0.2%
19:30 USD Retail Sales YoY High   2.8% 3%


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