Aussie Dollar Poised for Breakout on RBA Rate Decision
- Near-even bets for, against RBA rate cut spell volatility regardless of outcome
- Aussie Dollar wedged between trend-defining chart levels before rate decision
- Speculative sentiment to offer confirmation on up-, down-side Aussie breakout
The priced-in probability an interest rate cut at today's RBA monetary policy announcement is near 50 percent. The near-even split means that Australian Dollar volatility is likely regardless of the outcome as a sizable contingent of market participants is proven wrong and forced to readjust portfolios.
The benchmark AUD/USD exchange rate is wedged between trend-defining technical levels ahead of the rate decision. On the topside, prices are within striking distance of resistance defining the pullback from late-April highs. A daily close above this barrier would hint that the recovery from January lows is set to continue. On the downside, a breach of near-term support would also mark reversal of the 2016 advance and pave the way for multi-year down trend resumption.
Recent reversals in AUD/USD have found well-defined confirmation via the DailyFX Speculative Sentiment Index (SSI). We will look for more of the same to gauge the probability of follow-through on whatever directional break occurs in the aftermath of the RBA announcement to help establish whether the move ought to be taken at face value or faded.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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