- AUD/USD dived around 100-pips in a knee-jerk reaction to dismal Australian CPI report.
- Data released earlier today showed Australia’s Q1 headline CPI figures came in at -0.2% q/q versus +0.2% expected and +0.4% previous.
- The trimmed mean CPI stood at +0.2% versus +0.5% expected and against +0.6% last.
- Poor inflation data raised chances of a rate cut at RBA May meet, chances for a rate cut by the RBA in May stand at 49% probability vs 16% before the CPI.
- The pair went crashing further below 0.77 handle, to hit session lows at 0.7638 and is currently trading at 0.7641.
- Downside bias could see test of 0.7525 (rising trendline) and then 0.75 levels.
- The pair finds immediate support at 0.7631 (April 18th lows), while resistance is seen at 0.7708 (5-DMA).
- Liquidity is likely to be low until the FOMC. USD remains on the back foot ahead of the meeting and weaker USD likely to provide broad support to commodity markets.
- Our previous call (http://www.econotimes.com/FxWirePro-AUD-USD-struggles-at-077-handle-good-to-sell-rallies-199724) has hit all targets.
Recommendation: Book partial profits, lower stops to 0.77, target 0.7525/0.75
