Search ForexCrunch

The Australian dollar continues to suffer from the European debt crisis, and now lost the line of parity with the US dollar. The risk averse environment sent the pair lower toward 1.0020, where it stalled, but now its moving lower.

The next line of support is at the swing low of 0.9926. Further support is at 0.9850. In case of a recovery above parity, resistance is at around 1.0050, followed by more significant resistance at 1.02.

The pair is trading at around 0.9980 at the time of writing, and the move continues.  For more on the Aussie, see the Australian dollar forecast.

Also other commodity currencies such as the New Zealand dollar and the Canadian dollar are falling.

The recent issue in the European debt crisis was the horrible Spanish auction: Spain paid a dear price: almost 7% in yields on a new bond auction. An idea about transferring funds from the ECB to the IMF and back to European government bonds was floated.

This would allow the European Central Bank to aid the troubled countries in a better manner, yet without breaking its rules.

The ECB has avoided QE so far. The idea helped the markets for a short while, but when hope faded, the falls resumed, and the Aussie couldn’t hide.