RBA expected to keep rates unchanged, but do they soften their tone
The RBA is expected to keep rates unchanged in the new trading day (Feb 5 at 0330 GMT). The market is tilting toward a softening of the tone/expectations.
Ahead of the meeting (and rate decision), the AUDUSD has chopped lower in trading today. The move is corrective of the move higher from the January 25 low at 0.7075 to the high reached on Thursday at 0.72945. PS that high stalled right below the 200 day MA (currently at 0.7292 – it was higher on Thursday).
The fall today has taken the price to the 38.2% of that move higher at 0.72108 and stalled. The hold keeps the correction modest and keeps the bulls in play.
The not so bullish, is that in the process of moving lower today, the price did fall back below the 100 hour MA (blue line currently at 0.72316). That is a bearish move.
Those two levels (at 0.72108 below and 0.72316 above) will help define the next bias for the pair.
Move back above the 100 hour MA would be more bullish. Traders will view the move as a correction of a move higher. The price can march higher (even a potential re-test of the 200 day MA over time).
Move below the 38.2%, and the next targets come in at the 200 hour MA and 50% retracement at 0.71865 (green line) followed by the 100 day MA at 0.71733.
I would not be surprised to see the two levels to keep the pair contained until the decision, and then traders to run the pair dependent on the decision.