AUD/USD analysis: at two-year lows and poised to extend decline
AUD/USD Current price: 0.7074
- Positive Australian data fell short of supporting the Aussie.
- Weak equities and a strong dollar combined to tear the AUD down.
The AUD/USD pair plunged to 0.7065, its lowest since February 2016, with the Aussie still among the weakest currencies of the FX board, falling despite solid local data released at the beginning of the day. According to the official report, Australian trade surplus beat expectations by printing A$1.6B in August, the eighth consecutive monthly surplus. Moreover, export grew 15.3% from a year earlier, while exports and imports with China hit fresh record highs in the year to August. Nevertheless, the strength of the greenback and the sour tone of equities kept the pair on the negative side, all through the day. Australia will release the AIG Performance of Construction Index for September, HIA New Home Sales for August and Retail Sales, seen up 0.2% in August.
The pair attempted to recover ground but was capped by sellers around the 0.7100 figure, and despite oversold, the risk remains skewed to the downside, given that in the 4 hours chart, the pair extended further below all of its moving averages, with the 20 SMA maintaining an almost vertical slope but some 100 pips above the current level. The Momentum indicator bounced from extreme levels, but its upward strength has already eased, while the RSI maintains its downward slope, now at around 20. The pair could correct higher at the end of the week, should equities recover ground on the back of a strong US employment report, which could bring some relief to equities.
Support levels: 0.7085 0.7050 0.7010
Resistance levels: 0.7170 0.7200 0.7225
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
