AUDUSD is unclear after falling Minutes and China’s Q1 GDP linger

The AUDUSD continues to fall from monthly highs as the US Dollar strengthens. The pair fell below 0.6700, having dropped over a hundred pip from its high on Friday. The main driver is the recovery of the US dollar, while the drop in commodity and equity prices has not helped the Australian dollar.

The Reserve Bank of Australia (RBA) will publish the minutes of its most recent monetary policy meeting on Tuesday, at which it decided to pause its tightening cycle after ten consecutive rate hikes. The RBA is now assessing the cumulative impact of the rate hikes. For the time being, the RBA is expected to extend its pause in May.

China maintained its 1-year Medium-term Lending Facility (MLF) rate at 2.75%, with a net injection of CNY 20 billion through the MLF. The lowest level since November of last year. China reports Q1 GDP, March retail sales, and industrial production on Tuesday. The market consensus predicts a 4.0% YoY increase in GDP.

The US Dollar was the best performer on a quiet Monday, as expectations for Federal Reserve tightening increased. Current market prices indicate a 90% chance of a final 25 basis point rate hike at the May meeting. Rate cuts are also less likely later in 2023. As a result, US yields are higher, which benefits the US Dollar. The Greenback extended Friday’s gains and maintains a positive tone, but it is facing widespread resistance.

AUDUSD Technical Outlook

The AUDUSD is exhibiting pre-data anxiety as it swings around the 0.6700 round figure, between the 21-SMA and 200-SMA, ahead of the Reserve Bank of Australia’s (RBA) Monetary Policy Meeting Minutes and China’s first quarter (Q1) GDP data.

Nonetheless, the Aussie pair remains on the bear’s radar during early Tuesday, after falling for two days in a row. Bearish MACD signals and a steady RSI (14) line point to the AUDUSD pair continuing its downward trend. The 21-SMA and 200-SMA, which are near 0.6730 and 0.6685, respectively, limit the Aussie pair’s immediate moves ahead of the key catalysts.

If the AUDUSD pair crosses the aforementioned SMA region, a larger trading range comprised of an upward-sloping resistance line from March, ranging between 0.6800 and 0.6630, will be formed. becomes crucial for pair traders looking for clear directions.

If the downbeat data and dovish RBA Minutes push the Aussie pair past 0.6630, the chances of the AUDUSD pair falling to its previous monthly low of around 0.6565 cannot be ruled out.

Despite the latest inaction, the AUDUSD remains on the back foot. To confirm the bearish trend, a clear break of 0.6630 is required.

AUDUSD Daily Trends