- A rebound for the Australian Dollar on Sunday/Monday after the very unforeseen election result, with a win for the conservative coalition, with Labour previously expected to win.
- However, from a technical perspective resistance levels remained intact, whilst from a macroeconomic viewpoint, the absence of change was far from a bullish signal for the Australian Dollar.
- Tuesday 21st May has already seen the release of Minutes from the Reserve Bank of Australia (RBA) Meeting in May, which were dovish, whilst in a speech that followed RBA Governor Lowe has delivered a very dovish tone with the market now pricing around 90% for a RBA rate cut in June (on the 4th).
- This has seen AUDUSD plummet back lower and reinforces our short- and intermediate-term bear views.
AUDUSD bias stays lower
A rebound Monday in reaction to the Australian election result, but capped by our .6937 resistance level (at .6934) and also below the down trend line from mid-April, then a plunge lower into Tuesday to leave negative pressures intact from the accelerated push to the downside from mid-May through numerous supports, to keep risks lower for Tuesday.
The early February push .7073 set an intermediate-term bear trend.
We see a downside bias for .6873 and .6862; break here aims for a key level at .6829, possibly even towards .6800.
But above .6934/37 aims for .6959, maybe .6986.
Intermediate-term Outlook – Downside Risks: We see a downside risk for .6916.
Lower targets would be .6829 and .6738
What Changes This? Above .7069 shifts the outlook back to neutral; above .7206 is needed for a bull theme.
4 Hour AUDUSD Chart