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- Dovish RBA Allows the Aussie to Dive
Dovish RBA Allows the Aussie to Dive
The AUD/USD formed the double top technical pattern on H4 timeframe, following a breakdown through the 0.6570 low of November 30. Traders initially were repositioning ahead of the Reserve Bank of Australia's (RBA) policy rate meeting this Tuesday, so that the Greenback began to recover from its four-month low, also led by U.S. Treasuries yield's moderate bounce. More than 100 basis points of potential interest rates cuts by the Fed in 2024 are only wishful thinking now, as they are not given or guaranteed, but could be mostly priced-in. The Fed itself does not confirm its supposed stance reversal. Meanwhile, the RBA released a more or less dovish statement. After leaving its base interest rate unchanged at 4.35%, it shared a comment that economic data has aligned with the RBA's own projections, which may be interpreted as a key to the market's conception that any extra rate hikes now look unwarranted. In my view, it was less hawkish at least, compared to November statement. If markets feel that the hike cycle is over, then AUD/USD would be poised to test a 0.6510-0.6535 technical area as its nearest targets with a maximum double top measured goal of around 0.6475.
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