The AUDUSD has now spent the last month below the key 0.6750 level and is likely to meet resistance at this level again if and when it is able to rally higher. In the last three months the AUDUSD has generally fallen sharply from a six month high above 0.70 down to the current lows although it did enjoy some solid support from another key level of 0.6850 before dropping down to 0.6750.
The 0.6750 level has supported the AUDUSD well in recent months so this level is likely to continue to offer some resistance to any rally higher. Likewise the 0.6850 also looms likely to offer resistance should the AUDUSD be able to get back above the 0.6750 level any time soon. In the last two weeks of last year, it surged higher off support at 0.6850 to the six month high after having moved through previous resistance at 0.6850, which had put selling pressure on prices.
The trading range between 0.6750 and 0.6850 has been quite popular in the last six months, so it wouldn’t surprise many if it was to return there again. In the last three months of 2019, the AUDUSD steadily and slowly moved higher achieving higher peaks and troughs to rally off its ten year low around 0.6670 reached in early October. It has now however returned all those gains in half the time and has moved lower to below 0.65.
Not so long ago, the Reserve Bank of Australia (RBA) cited an increase in the unemployment rate as the most likely trigger for another interest rate cut, following three rate cuts last year to a historic low of 0.75%. However with the coronavirus taking a grip on financial markets around the world, central banks have been under scrutiny as to what actions they would take to combat the economic fallout. Given how quickly the virus is impacting the global economy, Australia's central bank didn’t wait any longer. Last Tuesday, the RBA cut its official cash rate to a record low of 0.5% as it attempts to directly combat the economic effects of the coronavirus. "The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors," said RBA governor Philip Lowe in his post-meeting statement. "The uncertainty that it is creating is also likely to affect domestic spending. As a result, GDP growth in the March quarter is likely to be noticeably weaker than earlier expected." Governor Lowe did however remain confident the Australian economy could recover quickly once the virus was under control. "Once the coronavirus is contained, the Australian economy is expected to return to an improving trend," he added.
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