AUD/USD Bearish Retracement Likely as RBA Set to Leave Cash Rate at 1.5%

AUD/USD – Technical Analysis for Australian Forex.

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Australia – Cash Rate

Tomorrow at GMT 4:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate, which is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Since short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies, Forex traders pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 1.5% in their last meeting and the forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.

United States – Unemployment Claims

On Thursday, at GMT 2:30 p.m., the US Department of Labor will release the unemployment claims figure, which measures the changes in the number of people who claimed for unemployment insurance over the last week.

Forex investors consider the unemployment claims data to be one of the most important fundamental indicators of the US job market. This is primarily because unemployment and consumer spending has direct correlation and an increasing number of unemployment claims indicate lower consumer spending in the economy, which makes up the bulk of the economic activity in the United States.

Last week, the US unemployment claims figure came out at 246,00 and the forecast for this week is set at an increase to 249,000.

Trade Recommendation for the AUD/USD

AUDUSD - Technical Analysis for Australian Forex Brokers - Feb 6 2017

Since breaking above the downtrend line on December 29, 2016, the AUD/USD remained bullish and climbed up around 450 pips over the last month. However, after reaching near the 0.7675 level last week, the AUD/USD found a strong resistance. Currently, the price is trading below this resistance level.

As the RBA is expected to leave the cash rate unchanged at 1.5% and the US unemployment claims is expected to come close to last week’s figure, the market is likely to remain tentative from the fundamental perspective.

However, given the that the AUD/USD found a strong resistance after a month long bullish rally, there is a strong possibility that the pair would start a bearish retracement this week.

Under the circumstances, it would be recommended that Forex traders consider placing a SELL order at market price for the AUD/USD with their  Australian Forex brokers, as long as it is trading below the 0.7675 level. A possible profit target for this trade would be around the 0.7600 level. On the other hand, Forex traders should consider placing a stop loss order above 0.7700, which was the last week’s high.

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Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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