February 6, OctaFX – The Australian dollar declined sharply after the central bank introduced the probability of a rate cut. In a statement, the governor said that there were scenarios where the next move in interest rates was up and other scenarios where it was down.
The statement came a day after the central bank left the cash rate unchanged at 1.5% and issued a hawkish statement. The Australian economy is facing challenges with increased personal debt and falling house prices in major cities. In the statement, he added that:
In the event of a sustained increased in the unemployment rate and a lack of further progress towards the inflation objective, lower interest rates might be appropriate at some point.
Could RBA Dovish Statement Push AUDUSD Lower?
The AUDUSD pair declined sharply to an intraday low of 0.7150, which is below the 38.2% Fibonacci Retracement level. The pair’s sudden decline brought it to below the 25-day and 50-day EMAs while the RSI has moved sharply to the oversold territory of 21.
The dovish statement from the RBA could push the pair lower to the 0.7130 level, which is also along the 21.6% Fibonacci Retracement level.
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