- AUD/USD is on the defensive, courtesy of the downside break of four-month-long contracting triangle.
- Aussie will likely drop to 0.69 if the RBA cuts rates by 25 basis points today.
AUD/USD is looking south ahead of the key data releases and Reserve Bank of Australia’s rate decision (RBA), having dived out of a narrowing price range last week.
As seen on the weekly line chart, the pair closed at 0.6997 on May 1, confirming a downside break of the contracting triangle created over the preceding four months. The sell-off from January 2018 highs above 0.80, therefore, seems to have resumed.
The pair may drop to 0.69 later today, as suggested by the bearish technical setup if the RBA cuts rates by 25 basis points. The markets are currently pricing in a 50 percent chance of a rate cut.
The Aussie, however, may re-enter contracting triangle with a move to 0.71 if the RBA keeps rates unchanged and sounds less dovish-than-expected.
Ahead of the data, the pair may also see some action following the release of Australia’s retail sales and trade numbers for March.
Daily chart
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Trend: Bearish
Pivot points
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