AUD/USD breaks below 0.70 mark for the first time since early Jan.
| • Aussie continues to be weighed down by RBA rate cut speculations.
• Oversold conditions/subdued USD demand does little to lend any support.
• The market focus now shifts to US macro data for some meaningful impetus.
The AUD/USD pair finally broke down of its Asian session consolidation phase and slipped below the key 0.70 psychological mark for the first time since early Jan.
The Australian Dollar remained on the defensive in wake of Wednesday's disappointing domestic CPI figures, which fueled speculations that the RBA might be forced to cut interest rates by 25bps as early as in May.
The data prompted some aggressive selling around the major and the bearish pressure aggravated amid resurgent US Dollar demand, though highly oversold conditions on the 4-hourly chart might help limit further losses.
The USD was now seen consolidating the overnight upsurge to 23-month tops, which coupled with growing optimism over a possible US-China trade deal could further extend some support to the China-proxy Australian Dollar.
Moreover, traders might also be reluctant to place any aggressive bets ahead of this week's important US macro releases, starting with the durable goods orders data later during the early North-American session on Thursday.
This followed by the advance US Q1 GDP report on Friday will play an important role in influencing the pair's momentum ahead of the latest FOMC monetary policy update next Wednesday.
Technical levels to watch
A sustained break through the 0.70 handle, leading to a subsequent weakness below 0.6985 would mark a fresh bearish breakdown and accelerate the fall further towards 0.6920-15 support area. On the flip side, the 0.7020-25 region now seems to act as an immediate resistance, above which a bout of short-covering could lift the pair further towards the 0.7050-60 supply zone.
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