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

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

View Live Chart for the AUD/USD

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