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Aussie Dollar Poised for Breakout on RBA Rate Decision

Aussie Dollar Poised for Breakout on RBA Rate Decision

Talking Points:

  • 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.

Want to see how SSI can help you gauge FX trends? Learn more here !

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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