Tomorrow, the AUDUSD will be in focus as the Australian GDP data is released. According to ANZ Bank, AU GDP is expected to decline by 7% on a quarter-on-quarter basis in Q2 2020. The market consensus puts this figure at -6.0%, which is in tandem with the forecast of the Reserve Bank of Australia (RBA). The data reflects the direct effects that the initial domestic coronavirus outbreak had on the Australian economy. The RBA retained the key interest rate at 0.25% but expanded its asset purchase program to 200 billion Australian Dollars in a dovish action that put the AUDUSD under pressure on Tuesday.
Outlook for the AUDUSD
A look at the daily chart shows that price has stalled at the 0.73831 resistance, with the latest daily candles forming pinbars. The rising wedge pattern was violated to the upside, potentially negating it, but the candlestick setup on the resistance provides hope for sellers. Validation of any short positions has to come from a worse-than-expected AU GDP reading of -10% or more negative. Such a reading would provide a valid basis to capitalize on this AUD-negative picture, targeting 0.72977 initially, with 0.72043 and 0.70595 providing themselves as additional downside targets. The divergence between the RSI and the price action also offers technical confirmation for this scenario.
On the flip side, a better-than-expected reading (negative reading closer to last month’s figures or better) may be viewed as AUD-positive. There has to be sufficient buying momentum to take the pair above 0.73831, targeting 0.74640 initially. Above this level, the AUDUSD would be at two-year highs, with the May 2018 tops beckoning to the bulls.
AUDUSD Daily Chart