FX.co ★ Global macro overview for 03/05/2016

Global macro overview for 03/05/2016:

The Reserve Bank of Australia (RBA) has cut its interest rates by 0.25% to 1.75% for the first time in 12 months this morning. In its announcement, the RBA said: "Inflation has been quite low for some time and recent data was unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast". In conclusion, it looks like the RBA could not tolerate the low inflationary pressures anymore and this is the reason for the rate cut.

Let's now take a look at the EUR/AUD technical picture on the daily timeframe. After the news release, the bulls managed to push the price above the technical resistance at the level of 1.5204, and now the market is trading just below the 50% Fibo at the level of 1.5335. In case of a breakout above this resistance, the next resistance is seen at the level of 1.504, but the growing bearish divergence on this and lower timeframes points to a possible corrective cycle to the downside before new highs are made.