The announcement by the Reserve Bank of Australia (RBA) to continue its plan to reduce government bond purchases (tapering) at its September policy meeting yesterday was seen as failing to stimulate the strengthening of the Australian dollar.
Investors saw it as a dovish signal by the RBA when the bond -buying move would be extended until February next year, different from the initial proposal until mid -November due to slow economic recovery factors.
The extension of the period for tapering done indicates bond purchases will still be maintained at the same amount for a longer period driving the Aussie dollar depreciation.
On the price chart of the AUD/USD pair, a clear bearish pattern was displayed on Tuesday yesterday after moving horizontally at the beginning of the week.
The price, which gave an early signal of bearish movement after falling below the support level of Moving Average 50 (MA50) on the 1 -hour time frame, has continued its lower decline below the level of 0.74000 yesterday.
After hitting a daily low yesterday around 0.73740, the price moved horizontally continuing into the Asian session on Wednesday morning testing the 0.74000 level which is the latest resistance of the price.
After touching the level of 0.74000 the price continued to decline until the beginning of the European session to continue the bearish trend.
The lower decline will lead to the price pull zone on the previous uptrend as in the 0.73340 and 0.73000 zones.
If a change in sentiment occurs and changes the direction of the price movement to rebound, a rise above the level of 0.74000 will push the price to a higher level towards the resistance of 0.75000.
Reaching the high of 0.75000 will be the latest high for the 8 -week trading period.
