AUD/USD: interest rate is likely to fall on 06.07.2015

July 6, 2015

Current trend

Australian dollar in the AUD/USD pair opened Monday with a gap down of almost 40 points in return for the events in Greece. Besides the European factor and the U.S. dollar strengthening, the Australian currency is pressurized by decrease in prices for liquefied natural gas, iron ore, decrease in Japanese demand as well as decline in Chinese stock market, and Australian Retail Sales statistics for May (+0.3% vs. 0.5% forecast).

The RBA decision on the discount rate is announced on Tuesday at 07:30 a.m. (GMT +3). The interest rate is expected to remain at 2%. Previous reduction of interest rates in Australia and RBA intention to ease the monetary policy had no tangible effect on decline in the Australian dollar. Therefore, it is hard to predict the market reaction this time. However, the volatility in pairs with the Australian dollar and in the pair AUD/USD is expected to be high.

ISM Non-Manufacturing and Labor Market Conditions Indexes are released today at 4:45 and 5:00 p.m. (GMT +3) respectively. Positive statistics strengthens the U.S. dollar in the AUD/USD pair.

Support and resistance

The pair broke through 0% Fibonacci (0.7590) correction to the decrease since July 2014.

OsMA and Stochastic lines on the timeframes, from the 4-hour to the month, indicate the further decrease.

The pair hit the last lows in 2008, at the level of 0.6000. Though this price is still 1500 points to go, given the fundamental factors, the movement in this direction in the medium term is likely to continue.

Nearest targets are 0.7450-0.7300.

Support levels: 0.7450, 0.7400.

Resistance levels: 0.7530, 0.7590, 0.7635.

Trading tips

Open short positions from the current price and from the levels 0.7530, 0.7590 with targets at 0.7480, 0.7450 and stop loss at 0.7620.

The breakout of 0.7635, supported by the indicators, should open long positions and the way first to 0.7700, 0.7720 and then to 0.7850, 0.8025.

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