AUDUSD is leading losses among the majors in today’s trading after RBA Governor Lowe hints at the possibility of further easing. As of this writing, the currency pair is down by almost 0.60% from its opening price for the day as it trades around 0.6560.
In his speech, the central bank head warned that the RBA is ready to increase its asset purchases to support the economy. According to him, recovery would be slow unless a vaccine becomes available. He also remarked that while policymakers are not considering negative rates now, it may still be a possible option in the future.
In terms of economic data, we had mixed numbers from Australia. The manufacturing PMI for May ticked lower at 42.8 from 44.1 in April. Meanwhile, the services PMI showed an improvement from 19.5 to 25.5.
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AUDUSD Outlook
On the 4-hour time frame, it can be seen that despite the downtick on AUDUSD in the last few hours, the uptrend still remains intact. This is evidenced by the rising trendline that becomes apparent when connecting the lows from May 15, May 18, and May 20. The current price where AUDUSD is trading, around 0.6560, also coincides with the 61.8% Fib level when you draw the Fibonacci retracement tool from the low of May 20 to its intraday high.
If AUDUSD manages to close above the trendline, it could suggest that buyers are still in control. Consequently, it could then mean that the currency pair may soon rally to its recent highs at 0.6615. If there is enough bullish momentum, AUDUSD may even rally to its March 9 highs at 0.6684.
On the other hand, a close below today’s Asian session lows at 0.6548 could mean that support at the rising trendline has been broken. It could then mean that AUDUSD is on its way to 0.6480 where it may test the 100 SMA for support.
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