AUD/USD extends daily decline, inches closer to 0.71

RBA's neutral tone weighs on the AUD on Wednesday.
US Dollar Index preserves bullish momentum.
Coming up: AiG Performance of Construction Index from Australia.

Following the sharp drop witnessed in the early Asian session on Wednesday, the AUD/USD pair struggled to shake off the bearish pressure and extended its declines to a 12-day low of 0.7117. As of writing, the pair was trading a couple of pips above that level, losing more than 100 pips, or 1.6%, on a daily basis.

As expected, the RBA this week announced that it kept its policy rate unchanged at 1.5%. Although the initial reaction to the RBA announcements was relatively muted, the AUD came under heavy selling pressure after Governor Lowe adopted a neutral/dovish tone while speaking at the National Press Club in Sydney on Wednesday. "Lower rates might be appropriate if the unemployment rises and inflation stalls," Lowe said. "The Board does not see a strong case for a near-term change in the cash rate."

On the other hand, the greenback continued to outperform its major rivals for the fifth straight day on Wednesday with the US Dollar Index advancing above the 96.30 mark for the first time in more than 10 days, keeping the selling pressure on the pair intact in the second half of the day. At the moment, the DXY is up 0.3% on the day at 96.36. Meanwhile, today's data from the U.S. showed that the trade deficit shrunk by more than expected in November.

During the Asian trading hours, the AiG is scheduled to release its Performance of Construction Index, which is unlikely to help the AUD recover its losses.

Technical levels to consider

The next support for the pair could be seen at 0.7075 (Jan. 25 low) ahead of 0.7000 (psychological level) and 0.6915 (Jan. 3 low). On the upside, resistances could be seen at 0.7140 (50-DMA), 0.7185 (20-DMA) and 0.7245 (daily high).

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.