Trend warriors gather ’round!
AUD/USD looks set to extend its downtrend as it consolidates near a key resistance zone.
In case you missed it, the People’s Bank of China (PBOC) slashed its five-year loan prime rate by 25 bps to 3.95% earlier today. This marked the first interest rate cut since June 2023 AND the steepest cut since the rate was introduced in 2019.
Meanwhile, not even the Reserve Bank of Australia’s (RBA) relatively hawkish meeting minutes was able to lend AUD a hand in the last couple of hours.
AUD/USD 4-hour Forex Chart by TradingView
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. and Australian dollars, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Will the consolidation at the resistance lead to AUD/USD extending its February downtrend?
For now, AUD/USD has yet to bust through the descending channel resistance near the 4-hour chart’s 100 SMA and the .6550 minor psychological level.
Look out for bearish candlesticks that may hint at rejection and trend continuation, as it could lead to AUD/USD heading back to its .6450 lows or even new monthly lows.
Don’t rule out AUD/USD’s upswing possibly leading to an upside breakout though!
Bullish candlesticks and consistent trading above the channel, 100 SMA, and even the R1 (.6570) Pivot Point line could draw in enough buyers to push AUD/USD to the .6700 major psychological handle and previous area of interest.
What do you think? Does AUD/USD still have enough room and catalysts to extend its downtrend? Or is it due for a pullback?