FxWirePro: AUD/USD fades upside post RBA, extends weakness below 0.72 handle, stay short on rallies

AUD/USD chart on Trading View used for analysis

• The Reserve Bank of Australia (RBA) held interest rates at 1.5%, as widely expected.
   
• The RBA highlighted that household consumption, housing markets, trade frictions, and stumpy wage growth all continue to keep interest rates steady.
   
• However, the central bank did manage to strike a somewhat hawkish tone, noting that business conditions are continuing to improve steadily and inflation is expected to average above the RBA's 3% minimum target for both 2018 and 2019.
   
• AUD/USD popped higher, but quickly faded the gains and slipped below 0.72 handle.
   
• Wider AU-US spreads, disappointing China PMI data, goodish pickup in the US Dollar demand, coupled with a mildly weaker tone around copper prices exerting some additional downward pressure. 
   
• Major trend in the pair remains bearish and recovery attempts were rejected at 55-EMA.
   
• The pair has retraced brief break above 55-EMA with an 'Inverted Hammer' formation which reinforces further weakness.
   
• Focus now on Fed Chair Jerome Powell's scheduled speech later during the US trading session.
   
• Break below 0.72 handle raises scope for weakness. Scope now for test of 0.7085 (Sept 11 low).

Support levels - 0.7144 (Sept 5, 18 low), 0.7107 (78.6% Fib), 0.7085 (Sept 11 low)
Resistance levels - 0.7226 (21-EMA), 0.7285 (55-EMA), 0.7315 (Sept 26 high)

Recommendation: Good to stay short on upticks, SL: 0.7285, TP: 0.7145/ 0.71/ 0.7085

FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at -3.18439 (Neutral), while Hourly USD Spot Index was at 103.316 (Bullish) at 1000 GMT.

For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.