The RBA shocked the market recently by keeping interest rates at 3.75% versus expectations of another 0.25% rate hike. Even though the bank commented on its surprising act, stating that further rate cuts could be seen in the future. The bank expressed its concerns about the recent news from China. According to news headlines, China is now trying to contain its dramatic economic growth by preventing certain banks from lending. This could put pressure on the Australian economy as Australia has benefited dramatically from China’s superb growth.

The news sent the Australian Dollar dramatically lower during Asian hours, forcing Aussie pairs to critical levels. The AUD/USD dropped to major support and is now trading within a tight bearish wedge. The EUR/AUD has also reached an interesting turning point after dropping significantly due to Euro weakness. Yesterday’s candle presented a reversal candle around Support. One must note that even though the upcoming hectic two days of trading can lead these pairs into any direction, a large amount of stop-losses are situated below the support levels. A break to the down side could lead to a big drop, while a break of the upper trend line on both the charts will be required to the start of a bullish trend.

AUD/USD Daily Chart



EUR/AUD Weekly Chart

For an individual chart analysis of the two assets including trend line analysis, see Dodjit’s chart analysis page.

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