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AUD/USD collapses to new 4 year low – 3 reasons

The recent dollar storm is taking its toll on the Australian dollar. AUD/USD fell to a new low of 0.8616 before it bounced back, but just a bit. It remains far from the previous lows.

The pair previously hung above the double bottom of 0.8660 and made false dips below this line. Is this yet another false break? Or is the Aussie catching up and has more room to fall?

Here are 3 reasons for the fall:

  1. USD storm: After a correction, the US dollar resumed its strength, gaining against the weak yen but the Japanese currency was not alone.
  2. Weak  Chinese services PMI: the HSBC services PMI dropped to 52.9 points, weaker than last month’s 53.5 points. While  manufacturing is more  important for Australia’s No,. 1 trading partner, this added weight on the Aussie.
  3. Falling commodity prices.Together with falling oil prices, also prices of copper and iron ore have been under pressure.

Earlier in the week, the RBA did not rock the boat and didn’t offer anything new.

More: AUD/USD  vulnerable to breakdowns – Elliott Wave Analysis.  Here is how it looks on the chart:

AUDUSD new 4 year low November 5 2014 lowest since July 2010 Australian dollar

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.