AUDUSD Leads Gains Despite Dismal Economic Forecasts from the RBA

AUDUSD is leading gains among the majors in today’s Asian session despite the RBA Monetary Policy Statement forecasting dismal projections for 2020. As of this writing, the currency pair is up by 0.60% at 0.6534.

According to the central bank, it expects the Australian economy to contract by 6% in 2020. Policymakers do not anticipate recovery to happen until the latter part of this year. For 2021, the RBA eyes a growth rate of 6.0%. The statement also reiterated the central bank’s earlier stance that it would not raise rates until inflation and employment reach desired levels.

Despite this AUDUSD is still trading higher. It could be partly due to the NFP report due later today at 1:30 pm GMT which is expected to show job losses equal to 22 million for April. This is top-tier economic data and investors could be reducing their long-USD positions ahead of the report.

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AUDUSD Outlook

The double bottom chart pattern I pointed out on AUDUSD yesterday worked out nicely. Support at the 100 SMA held and neckline resistance at 0.6475 was broken. As of this writing, the currency pair is testing resistance at a previous trendline (by connecting the lows of April 3, April 21, and April 23). Reversal candlesticks around this price, 0.8530, could indicate that there are sellers in the market. AUDUSD could then fall to 0.6409 where it may retest the 100 SMA.

On the other hand, a strong close above 0.6550 could mean that the currency pair may still trade higher with near-term support at 0.6570. If that breaks, the next resistance could be at 0.6680 where AUDUSD topped on March 9.

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