AUD/USD bears stalling at key confluence, pick-up in metals, ATR near max ahead of RBA

• AUD/USD is a major focus at the start of this week with plenty in the price. 
• With China out, AUD/USD traders will need to contend with volatility in metal prices.
• RBA is on the cards tonight, with a bias towards neutral.

AUD/USD is currently trading on the back-foot as the dollar continues with its upward correction and has now completed a 78.6% fibo retracement of the Fed sell-off in the DXY at 95.80, currently trading at 95.84, hitting a high of 95.92 and is well on the way to a 100% retracement at 95.98. 

AUD/USD has dropped from 0.7260 to a low of 0.7211. Copper, in very recent trade, has spiked higher but has been on the backfoot since topping out on Friday, sinking to test the 23.6% fibo retracement of the late Jan swing lows. Gold and silver are also catching a strong bid as stocks come under a little bit of pressure as the greenback's bullish run stalls for the session so far. However, US yields are holding up which should underpin the downside in the Aussie market as we lead in towards the RBA tonight. 

RBA outlook:

It is very hard to imagine a hawkish outcome considering the soft consumption print in Q3 GDP and the slump in building approvals to a 5yr low. Moreover, with the  Fed, BoC and ECB all hitting the breaks and the BoE sidelined due to Brexit, as well as the RBA and RBNZ likely to remain concerned over contagion risks from a slow down in China and the trade war saga between the US and China, markets are expecting a more neutral outlook from the central bank. 

"If the Bank conveys that growth is expected to track above trend and that progress on returning inflation to target is expected to be 'gradual', there is no strong case to adjust the cash rate. Under this scenario we would expect the downgrades to GDP to be front loaded, reversing the upgrades to GDP made in Dec. The Bank can cite low rates, record low unemployment, high vacancies, the easing in macro-prudential policy, buoyant company profits, strong trade, positive spillovers from infrastructure spending, a less hawkish stance from the Fed, BoC and ECB and the potential for China cuts/stimulus to support the Bank's forecasts,"

analysts at TD Securities explained. 

AUD/USD levels

AUD/USD has dropped out of the ascending channel within an ABC correction to the 38.2% Fibo retracement at 0.7211 of the late Jan rally from the 0.7070's. The upside was once again capped by the 200-D SMA (stop territory). The current support level is holding with the confluence of  38.2% Fib and the 0.72 round number. The 100 hr SMA is located at 0.7229 that has confluence with S1, which could be a pullback target if the 38.2% Fibo holds these initial tests ahead of 0.7200. Below there opens the 50% fibo down at 0.7185 which meets the 200-hr SMA and S3 confluence for day traders. However, the price has already travelled 80% of its ATR - So the path of least resistance is likely to the upside at this juncture, especially ahead of the RBA.