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AUD/USD has dropped 30 pips in the last 45 minutes, tracking the post-RBNZ sell-off in the NZD/USD pair.  

The pullback to levels below the 50-day moving average (MA) of 0.7124 has weakened the bullish case put forward by the falling wedge breakout, confirmed yesterday with a close at 0.7134.  

That said, the pair is still holding above the upper edge of the falling wedge, meaning the breakout is still valid and the bullish case would again strengthen if the spot reverses losses seen in the last few minutes with a move above the previous day’s high of 0.7148.  

The Reserve Bank of New Zealand (RBNZ) kept its official cash rate  unchanged at 1.75 percent earlier today, as expected,  but said the next move is likely to be down, surprising markets, which were positioned for a neutral stance. In response, the NZD dropped more than 100 pips, dragging the Aussie dollar (also a commodity dollar) lower.  

Both the RBNZ and the Reserve Bank of Australia are now seen cutting rates this year at least by 25 basis points.  

Daily chart

Trend: Bullish above 0.7148