The AUD/USD pair tests for the second time the neckline of a head and shoulders pattern, trading with a bid tone in the last sessions. However, traders should not forget that the head and shoulders is a bearish pattern, and retesting the neckline is only normal market behavior.
As always, during the first week of the month, the Reserve Bank of Australia (RBA) announced its interest rate decision. It decided to keep the policy settings as they were – targeting 10 basis points for the cash rate and the short-term Australian Government yield. The bank has noted that the global trade has picked up and inflation remains low.
In normal times, such a statement should be bullish for the currency. Yet, these are not normal times and, if we look over the past year or so, the AUD/USD pair rallied on just the opposite. Hence, we should not be surprised to see the pair declining on better than expected economic data if it rallied on worse.
AUD/USD Technical Analysis
The technical picture reveals the head and shoulders pattern that formed in the last quarter and the break of the neckline in the last trading days of March. Bears may want to remain on the short side with a stop at 0.7750 and a target of 0.7285.