RBA decided to remain on hold as it was widely expected by the market and kept its interest rate at +1.50%. The accompanying statement had an upbeat tone with comments for inflation being likely to remain low for some time, a gradual pick up of inflation is expected and it should reach a bit above +2.0% in 2018. The statement also spotted as continuing source of uncertainty the outlook for household consumption. Specifically, it mentioned that household incomes are growing slowly and debt levels are high. AUD/USD was practically not influenced by the RBA decision indicative of the neutral effect as the market was expecting the outcome.
AUD/USD began to trade yesterday in a sideways manner with a bullish tone, however dropped heavily as the later on during the US session breaking the 0.790 support level. The pair could continue to trade with some bearish tone, however we see the case for the pair to stabilize somewhat later on as the Relative strength index is already below 30, possibly signaling an overcrowded short position. Should the bears continue to have the upper hand we could see it breaking the 0.7782 support level and aim for the 0.7683 support barrier. On the other hand should the bulls take the driver’s seat, we could see them drive the pair beyond the 0.7900 resistance level, aiming for the 0.8000 resistance hurdle.