This week, the currency pair AUD/USD continues to decline, exhausting its potential after the release of the negative US retail sales data. At the moment the price is trying to reach the level of 0.7945 (bottom line of Bollinger bands).
Note that today, the minutes of the meeting of RBA for May have been released. At this meeting the decision to reduce interest rate up to 2.0% was adopted. Board Members of the Bank discussed the growth rate of the Australian economy, which according to the forecast can remain below the average within this year and partly next year. It was also admitted that the serious problem represents the decline in inflation to the level of 1.7% last year. In these circumstances the decrease in the interest rate is advisable as it can increase demand and provide additional support to the economy.
Among fundamental news scheduled for Tuesday is the data on the American real estate market. It is expected that the number of approvals to construct and new houses foundations will increase, which can support the American currency and trigger the decline in price of the pair AUD/USD.
Support and resistance
Technically, the pair is trying to reach the level of 0.7945 (bottom line of Bollinger bands) and 0.7910 (Fibonacci retracement of 38.2%). In case of breakdown of the latter level the price can go down to 0.7875 and 0.7840 (Fibonacci retracement of 50.0%). In case of the reversal from the level of 0.7910, the price is likely to return to 0.8025 (middle line of Bollinger bands).
Technical indicators give mixed signals. Bollinger bands are directed downwards. MACD histogram has moved to the negative zone, forming a sell signal. Stochastic lines have turned upwards.
Support levels: 0.7945, 0.7910, 0.7875 and 0.7840.
Resistance levels: 0.7990 and 0.8025.
It is recommended to open short positions at the current price with the targets of 0.7945 and 0.7910. Pending buy orders can be placed at the level of 0.7910 with take profit at 0.8025.