The RBA has cut the OCR by 25 bp taking it to a record low 0.5%.

According to the statement, “The Board took this decision to support the economy as it responds to the global coronavirus outbreak.”

It appears to coronavirus is a worry in that it will restrict the move to stronger employment which has been a worry for the RBA for some time now.

Headed into the announcement today, the odds of a market cut were sitting at 100%. However, amongst analysts and economists, the decision was still line ball.

The Aussie has jumped on the news after being red early in the session to now pushing higher.

Key Levels

It’s been a wild ride for the AUD/USD to say the least and I don’t see anything changing for a while yet. Despite today’s decision, the real focus is on what is happening in the US.

There are a few key elements to consider. We must remember that the Aussie is a risk-on trade. So its moves are highly correlated with stocks. The talk is the FOMC might cut rates again, but this will also weaken the USD. So that would add some upward pressure.

And then there is the RBA which is another element that we will need to factor in.

So far the key levels are 0.6450 and 0.6600. As both of these are the recent swing highs and lows. If price holds above the upper level, then that breaks the downtrend.

On the flip side, if price takes out the lows, then that adds to the trend at the moment.