RBA might hold rates steady, go long AUD/USD – Growth Aces

FXStreet (Barcelona) - The Growth Aces Research Team expects RBA to maintain a neutral bias in May, which is against market expectations for a rate cut, and might support AUD gains.

Key Quotes

“The RBA cut interest rates to a record low of 2.25% in February, but the central bank surprised many analysts by skipping further moves at its policy meetings in March and April. The next RBA meeting is scheduled for May 5 and financial markets expect a rate cut. Futures markets imply around a 50% chance of a quarter-point easing in May, rising to nearly 90% in June.”

“In our opinion the RBA may surprise the market and keep rates on hold which will support the AUD.”

“There were no major changes in the RBA language but the AUD/USD fell significantly after Stevens’ comments. Moreover, investors expect soft CPI figures on Wednesday (1:30 GMT) adding to pressure on the AUD.”

“We got long on AUD/USD at 0.7730 and AUD/JPY at 91.80. The longs could be in trouble in case of weaker CPI reading. The nearest support levels is 0.7673, daily low on April 16.”

“Resistance: 0.7736 (55-dma), 0.7798 (hourly high Apr 20), 0.7844 (high Apr 20)”

“Support: 0.7673 (low Apr 16), 0.7600 (psychological level), 0.7573 (low Apr 15)”

“AUD/USD: long at 0.7730, target 0.7950, stop-loss 0.7620”

“AUD/JPY: long at 91.80, target 94.00, stop-loss 90.80”