AUD/USD analysis: steeper decline expected on a break below 0.7250

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7291

AUD/USD at yearly lows on the back of risk aversion, collapsing equities.
The RBA downgraded its inflation outlook, anticipating rates will remain low for longer.

The Aussie was not immune to the sell-off in high-yielding assets, falling against the greenback to 0.7279, its lowest in over a year, to close the day a few pips the 0.7300 level. The RBA released the statement of its latest monetary policy meeting early Friday, which included a downgrade of the central bank's inflation forecast, with policymakers now seeing underlying inflation slowing to 1.75% by the end of the year, and not expecting to hit the 2.5% target until 2020. The document also showed that the RBA is confident about economic growth, seeing annual GDP above 3.0% for this year and the next one. The fact that rates are now seen at record lows for another two years, added to the pair's plunge on risk-aversion, which saw worldwide indexes closing at multi-month lows. There won't be macroeconomic releases in Australia to kick-start the week. The pair broke its previous 7-week range to the downside, anticipating a steeper decline ahead. In the daily chart, it´s now some 100 pips below a flat 100 DMA, while technical indicators maintain their sharp downward slopes well into negative territory. In the 4 hours chart, technical indicators pared their declines, now directionless in extremely oversold levels, while the 20 SMA crossed below the larger ones, all of them in the 0.7380/0.7400 region. Sellers should contain rallies in the 0.7310/20 region to maintain the bearish potential firm in place.

Support levels: 0.7280 0.7250 0.7215

Resistance levels: 0.7320 0.7360 0.7400

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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.

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