The Australian dollar is trending lower in the short term and appears likely to test support around 0.7500 in the sessions ahead - with a little help from the Reserve Bank of Australia.
The RBA is not averse to a lower exchange rate based on their previous comments and this may have influenced Tuesday's decision to extend their bond buying programme a month sooner than most were expecting nL1N2K8083.
They ensured it was a 'dovish easing' by adding that they did not expect to raise the cash rate until 2024 at the earliest.
There are other factors that portend a lower AUD/USD exchange rate.
The Dalian iron ore price has fallen over 16% since peaking on Dec 21 and copper has fallen over 5% since peaking in early January. Meanwhile, the U.S. dollar is showing signs of life after looking exposed to steep losses heading into 2021, managing to hold firm this week despite buoyant equity markets.
The AUD/USD is trending lower in the short term, with the 5, 10 and 21-day moving averages aligned in a bearish formation. The first objective is the 38.2 Fibonacci retracement of the 0.6990-0.7819 rally at 0.7502.
Only a move back above the descending 10 DMA at 0.7675 would suggest a base is forming.
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