Originally published by guppytraders.com
Much to the disappointment of the Australian Reserve bank board, the Australian dollar barely moved in reaction to the latest 25 basis point cut in the cash interest rate to 1%. The weakening of the Australian dollar is an essential objective of monetary policy as the Reserve bank attempts to light a fire under Australian economic growth. Cheap money has lit a fire under the Australian market index and time will tell just who gets burned. 
The lack of movement in the Australian dollar suggests that the widely anticipated 25 basis point cut was ‘baked into the cake.’ It was the expected move, so the market had already taken this into account. This lack of movement does not mean that the Reserve Banks objectives are not achievable. The long-term downtrend in the AUD is well established and under no immediate threat.
The key trend feature of the chart is the behavior of the Guppy Multiple Moving Average. The long-term groups of averages reveal the way investors are thinking and they are consistently short the AUD. The long-term group is widely and consistently separated which shows steady trend behavior.
The short-term group of averages provides insights into the way traders view the market. They trade the rallies, but the balance is clearly on the downside because the separation between the long- and short-term groups of moving averages remains consistent.
The second key feature is the break below the historical support level near $0.71. The AUD did spend eight months oscillating around this support level but when it was broken in April 2019 the AUD fell quickly to test historical lows near $0.685. These lows were first created in January 2016.
The Reserve Bank has not indicated how low it would like to see the AUD fall but the so-called flash crash in January 2019 provides a guide with a target near $0.67. This was a catastrophic low dismissed at the time as an aberration but now that target is looking more achievable. There is no indication that the AUD is making a bottom near $0.685 so traders are using rallies to build short positions in anticipation of a downtrend continuation. The Australian Reserve bank has few surprises left up its sleeves, but this is no hindrance to the downtrend continuation.