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RBA's Surprise Rate Cut Drags the Aussie Lower

The RBA cut its official cash rate to 2.25% from 2.50%. It was expected by most to hold rates, but actually didn't come as such a surprise for many others. The fact that central banks of developed nations have been dovish/cutting rates/increasing stimulus pressures the RBA to also cut rates. Of course, the bank has iterated other reasons such as disinflationary pressure and weak domestic demand. Glenn Stevens acknowledged that the Aussie has fallen noticeably against the USD, but still believes it is above its "fundamental value". 

The dovish nature of the statement to go with the rate cut suggests, the RBA still has the door open for more rate cuts. 

Trader's faded the AUD/USD after a very brief consolidation.

AUD/USD 4H chart 2/3

(click to enlarge)

The AUD/USD continues a downtrend that has recently picked up speed in the new year. The 4H chart shows the reaction of the market pushing AUD/USD from above 0.78 to 0.7650 immediately after. 

It is now approaching 0.75, which was a level Stevens believed was more reasonable for the AUD/USD. At this point, if there is a pullback, a bearish market should see sellers at 0.7750.