The Australian Dollar is trading lower on Thursday as part of a general decline in higher-yielding assets. Earlier in the session, Reserve Bank of Australia Governor Philip Lowe ruled out the possibility of negative rates deployed in Australia, saying the policy would not benefit the economy. The statement should’ve triggered a rally, but the price action suggests it may have already been priced into the market.
At 16:31 GMT, the AUD/USD is trading .6560, down 0.0040 or -0.61%.
The reaction also suggests that perhaps traders don’t believe that his statement was the final answer. After all, last week Bank of England Governor Andrew Bailey said the central bank was not “planning or contemplating” the move. However, on Wednesday he told Parliament that negative rates were under “active review.”
It also followed confirmation from the Reserve Bank of New Zealand last week, which noted that “a negative official cash rate will become an option in the future”.
But on Thursday, Dr. Lowe dismissed the possibility of Australia’s official cash rate falling below zero.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. A trade through .6616 will signal a resumption of the uptrend. The main trend will change to down if sellers take out the last swing top at .6402.
The minor range is .6402 to .6616. Its 50% level at .6509 is potential support.
The short-term range is .6254 to .6616. Its retracement zone at .6435 to .6392 is the second potential support zone.
Daily Swing Chart Technical Forecast
Late Thursday, the AUD/USD is trading inside yesterday’s range. This tends to indicate investor indecision and impeding volatility.
On the upside, the first target is yesterday’s high at .6616. The next target is the March 9 top at .6685 but the Aussie will have a hard time getting there today unless there is a pickup in the volume.
On the downside, the first target is .6509. Since the main trend is up, buyers are likely to come in on a test of this level. However, if it fails, the AUD/USD could plunge into .6435 to .6392 over the next few days.
This article was originally posted on FX Empire