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.