AUDUSD cut rates 25bp to 2.75% could there be another fall?

The RBA lowered it benchmark rate to a record low at today's meeting driving AUD/USD below the 1.0200 level in what was otherwise a very uneventful session in the currency market. The RBA cut the interest rate another 25bp to 2.75% citing slowing growth in the global economy and leaving open the possibility that the central bank may lower rates further before the year end.

Governor Stevens made particular mention of the exchange rate, stating that it,"has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time. Moreover, the demand for credit remains, at this point, relatively subdued." This was a clear signal by the central bank that it views the AUD/USD as too high at current rates and would like to see the pair trade lower - at least below parity - in order to rebalance the economy and stimulate the export sector.

To drive its point home the RBA stated that. "The Board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand. At today's meeting the Board decided to use some of that scope." The emphasis on some suggests that the RBA is not finished easing just yet and given the absence of any price pressures in the Australian economy, would not hesitate to cut rates to 2.5% before the year end.

The Aussie initially tumbled on the news dropping below the 1.0200 level but then found some support from reported Asian Central Bank buyers who were bargain hunting the pair. However as the day progresses the downward pressure on Aussie is likely to increase as markets fully digest today's message from the RBA. With global growth clearly slowing, especially in its key export market of China, the RBA is now seriously focused on lowering the exchange rate for the pair. For now the AUD/USD enjoys long term support at 1.0150 but if tonight's AU report confirms the slowdown in economic activity the pair could very quickly fall towards the key parity level as the week progresses.fxstreet

Key Support: The breakdown of the support in the 4H chart brings the AUD/USD to another key Support around 1.0153 however could keep the AUD/USD in long-term consolidation, has a reversion-back-to-the-mean scenario at least back toaward 1.0303 weekly pivot
If the market falls through 1.0153 amd 1.0141 support zone, it will open up the parity level as well as a rising trendline going back to Oct. 2011, and the 200-week SMA, which is around 0.9860 at the moment..timelessfx