AUD/USD extends its falls and is now below the critical 0.90 line. The last time it fell to these levels, it only went as far as 0.8998 before bouncing back and making and impressive recovery. And now, AUD/USD is trading at 0.8982 after already hitting a low of 0.8967.
The trigger for the move was the better than expected ADP report in the US. Is this move for real? The weakness of the Australian dollar and a recovery of the USD could make this breakdown more real.
Update: US GDP exceeds expectations and AUD/USD extends its drops.
The Australian dollar has been on the back foot in recent days. It was seriously hit by comments from RBA governor Glenn Stevens, which undoubtedly left the door open for a rate cut in the upcoming rate decision on August 6th.
While his words about the economy, inflation and the Australian dollar weren’t that different from previous comments, this was enough to cement expectations for a cut from 2.75% to 2.50% and it sent AUD/USD from the highs of near 0.93 to the 0.90 handle.
Technicals have been bearish lately as well.
The US dollar suffered a general sell=off lately, falling across the board. However, this weakness might be coming to an end: we have seen both EUR/USD and GBP/USD fail to break above 1.33 and 1.54 respectively. In addition, expectations from the upcoming data (GDP and the July FOMC meeting), that any minor upside surprise can boost the greenback.
The next levels for the Aussie are 0.8767 and 0.8567, which were major levels back in 2010. For more lines, events and analysis, see the AUDUSD forecast.
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