AUD/USD tumbles to lows, farther below 0.80 handle after RBA’s Lowe

Haresh Menghani FXStreet

The AUD/USD pair extended overnight post-FOMC sharp retracement from near-two week highs and broke below the key 0.80 psychological mark during Asian session on Thursday.

On Wednesday, the Fed finally made a formal announcement that it would begin normalizing the balance sheet in October and the median dot plot projected one more rate hike in 2017. The financial markets assessed the overall tone to be more hawkish than expected, easing pressure on the US dollar and intensifying pressure on higher-yielding currencies - like the Aussie.

September FOMC: The long and unwinding road - TDS

Against the backdrop of a follow through greenback buying interest, weaker tone around commodity space, especially copper, was also seen weighing on commodity-linked currencies and collaborated to the pair's heavily offered tone.

Meanwhile, the latest comments by the RBA Governor Phillip Lowe suggested that the Australian central bank could be far from considering any monetary policy tightening, which further aggravated the selling pressure and dragged the pair to fresh session lows near the 0.7970-65 region.

• RBA’s Lowe: Rising rates abroad have no automatic implications for Australia

• RBA’s Lowe: RBA has not sought to overly fine tune monetary policy

Trader would now take cues from today's second-tier US economic releases - weekly jobless claims and Philly Fed manufacturing index, due later today. In the meantime, broader market sentiment around the greenback would remain an exclusive driver of the pair's momentum through European session.

Technical levels to watch

Immediate support is pegged near 0.7945 area (50-day SMA), below which the pair is likely to accelerate the slide towards the 0.7900 handle ahead of 0.7870 horizontal support.

On the flip side, any recovery attempts might now confront fresh supply near the 0.80 handle, which if cleared could lift the pair back towards 0.8030-40 supply zone.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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