The AUDUSD pair rose today after the Reserve Bank of Australia (RBA) released its April interest rates decision. As was widely expected, the central bank left interest rates left interest rates unchanged at a historic low of 0.25%. In the accompanying statement, the governor said that the bank was committed to support Australian businesses in this period.
The Australian economy is set to have its first recession in more than three decades as a result of the Coronavirus pandemic. The disease has mostly affected internal demand for the services the country is known for. It has also affected the country’s external demand, especially from China, where the country exports two thirds of its goods. Still, there are signs that the Australian economy is improving albeit slowly.
The Australian government and the RBA have moved to support the economy. The RBA has provided stimulus worth more than $90 billion to support small and large businesses. Meanwhile, the Federal and local governments have unveiled a package worth more than $200 billion. In the monetary statement, the governor said that:
The Bank has injected substantial liquidity into the financial system through its daily open market operations to support credit and maintain low funding costs in the economy. It will continue to ensure that the financial system has sufficient liquidity. Given the substantial liquidity that is already in the system and the commencement of the Term Funding Facility, the daily open market operations are likely to be on a smaller scale in the near term.
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AUDUSD Technical Outlook
Looking at the two-hour chart, the AUDUSD pair has been on an upward trend since March 19, when it bottomed at 0.5500. The pair continued to rise today following the relatively hawkish statement from the RBA. The pair is slightly above the 14-day and 28-day exponential moving averages while the momentum has been elevated. The pair is also attempting to test the important resistance of 0.6210. I expect the pair to maintain the upward trend if it moves above this resistance level.
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