AUD/USD Slides Further, Drops to Seven Week Low
The AUD/USD pair built on to its Tuesday's sharp fall and erased its Asian session recovery to currently trade near day's low of 0.7460.
On
Tuesday, RBA unexpectedly lowered its key benchmark interest rates by
25bps to a new record low of 1.75%. The recent data of domestic
inflation pointing to deflationary pressures and concerns over Chinese
economic slowdown, country's largest trading partner, has been fueling
speculations of a rate-cut. The central bank, however, decided to front
load the policy action. The markets took the rate-cut with surprise,
knocking off the Australian Dollar (AUD) against most major currencies.
Tuesday's
fall dragged the pair below its immediate support at 50-day SMA and
subsequently below 0.7500 psychological mark. The pair is currently
trading near 0.7450 support marking 38.2% Fibonacci retracement level of
0.6827-0.7834 up-swing. Hence, extended selling pressure below this
immediate support now seems to open room for further downward trajectory
for the pair.
Technical levels to watch
Weakness
below 0.7450 support is unlikely to find support ahead of mid-March low
levels near 0.7412-10 zone. Weakness below 0.7400 could easily drag the
pair further towards its next major support near 0.7360-55 area, also
nearing 50% Fibonacci retracement level.
Meanwhile on the upside,
the pair need to first sustain its strength above 0.7500 in order to
attempt any meaningful recovery. Strength above 0.7500 handle seems to
lift the pair back towards 50-day SMA support break-point now turned
strong resistance near 0.7555-60 region.
