AUD/USD Slammed to 9-Week Low on Dovish RBA
As we head towards today's key release, US monthly jobs report, the AUD/USD pair extends the slide to currently trade near fresh nine week low level of 0.7360.
Following Tuesday's surprise rate-cut by the Reserve Bank of Australia (RBA), the pair got slammed below 0.7500 psychological mark. The fall was further aggravated on Friday as RBA, in its quarterly Statement on Monetary Policy, raised concerns over slowing inflation. The central bank lowered its inflation outlook for 2016 from its previous estimates of 2-3% to 1-2%. The lowered inflation outlook fueled speculations of a further rate-cut by the central bank, dragging the Australian Dollar lower across the board.
Adding to it was a renewed sell-off in crude oil prices, which further battered the fall in commodity-linked currencies, including the Australian Dollar. Moreover, cautiousness ahead of the US non-farm payrolls data also contributed to negative sentiment on Friday.
Technical levels to watch
From current levels, the pair seems unlikely to find support ahead of 0.7335-30 confluence zone, comprising of 100-day SMA and 50% Fibonacci retracement level of 0.6827-0.7834 relentless up-move. Sustained weakness below this support confluence is likely to get extended towards its next major support near 0.7260 region representing the very important 200-day SMA.
Meanwhile on the upside, 0.7400 round figure mark is likely to provide some immediate resistance. Even if the pair manages to clear this immediate hurdle, any further up-move now seems capped at 38.2% Fibonacci retracement level support break-point, now turned immediate strong resistance near 0.7445-50 region.