The Australian dollar surrendered to the gloomy mood in the markets and now dips below support, at a one year low against the US dollar. If this break is confirmed, there is quite some room before the next line of support.
The last times that these levels were seen was at the end of September 2010, before QE2. It’s no chance that the termination of QE2 three months ago began a downfall in the Australian dollar, but its more about Greece right now:
The chances of a Greek default have risen. A lot. As a “risky” asset, the Australian dollar was sold off.. A possible resignation of Greece’s PM and a possible bankruptcy of French / Belgian bank Dexia sent the US dollar higher, and commodity prices lower. This added to the fall of the Aussie..
See the European crisis recap for a summary of all the news.
AUD/USD is now at 0.9528, below support at 0.9540. The pair already fell towards this level much earlier, but stopped. In the thin trading hours, the pair makes its move lower, so this should be treated with caution.
The next level of support is at 0.9463, which was an important line a long time ago. Further significant support is at 0.93. With the recent sharp moves, anything is possible. On the upside above 0.9540, 0.9622 and 0.97 are the lines to watch.
The RBA will soon make its monthly rate decision. This is one of the reasons for the hesitation around this level.
For more Australian events in this busy week, see the AUD/USD forecast.
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