Australian Dollar - AUD/USD Eyes Minutes from RBA March Meeting
On Tuesday, March 18th, the Reserve Bank of Australia (RBA) is scheduled to release the minutes from the monetary policy meeting which was held on March 4th. The RBA kept the benchmark interest rate unchanged in its March meeting and expressed concerns over the strength of the Australian Dollar (AUD). Generally speaking, dovish RBA policy meeting minutes are considered bearish for the AUD/USD and vice versa.
RBA March Meeting
The RBA once again kept the overnight lending rate steady at 2.5% on March 4th, saying that the economy had started showing signs of improvement. The Reserve Bank of Australia said that the Australian Dollar was uncomfortably overvalued, posing threat for its growth. In the monetary policy statement, the RBA also mentioned the recent economic situations of some major economies.
“The US economy is suffering the consequences of below-average temperatures; however, the long-term economic outlook of the world’s largest economy is bright. Recovery in the Eurozone appears fragile while Japan’s recent growth is very impressive. China’s fourth quarter growth data remained broadly in line with the expectations. Although commodity prices have declined considerably in the recent past, they are still high in historical terms,” the RBA said in its monetary policy statement.
Concerning the Australian economy, the Reserve Bank of Australia stated that the housing market is showing strong growth. Similarly, consumer demand and exports are also rising despite the unemployment rate’s consistent upward trend. Thus, the RBA appeared very optimistic about the growth outlook because of the low interest rate.
Minutes from March Meeting
The minutes from RBA March meeting will provide medium term direction to the AUD/USD and other Australian Dollar crosses. If the policymakers discussed any plans to intervene in the open market, it would incite huge bearish trend in the Australian Dollar. Similarly, investors will also analyze any further detail about the outlook of the labor market.
AUD/USD is poised for a breakout through the rising wedge formation as demonstrated in the following chart. A breakout through either side will provide clear direction to the pair. On the upside, two major hurdles are being noted around 0.9200, the 50% fib level and then 0.9321, the 61.8% fib level resistance.
Australian Dollar - AUD/USD Daily Chart
On the downside, support can be noted around 0.8914, the 23.6% fib level, ahead of 0.8679, which is the swing low of the previous wave. A break below 0.8679 shall expose the 0.8500 handle, which is the long term pivot zone for the AUD/USD pair. Therefore, depending upon the outcome of the minutes, a good trade strategy may be to buy near 0.8700 and sell around 0.9200.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.