The AUD/USD Flirts With 75 Cents
Rowan Crosby • 1 min read
The news today is certainly surrounding the looming crisis out of Italy and the Eurozone. Overnight we saw strength coming back into the safe-havens and the USD. That has meant in Asia, there is more pressure still coming onto the AUD/USD.
Things are relatively quiet on the news front in Australia, so much of the attention at the moment is on how the USD strength will continue to impact the Aussie.
There is some speculation that the crisis in Europe might impact the rate of interest rate hikes in the US. There are certainly more scheduled for this year, with June looking a likely candidate. However, if the Eurozone contagion grows that might slow things down.
From a fundamental point of view, that will slow the decline we are seeing in the AUD/USD.
From a technical perspective, we are moving lower and forming a downward channel. So far we have been holding up quite well and bouncing off the upper trend line.
At the moment we are testing 0.7500, which is an important round number level. It certainly has the potential to provide some short-term support. But at the same time, if it cracks we can look at a potentially large drop.
Given the momentum in the USD at the moment, it will take some serious buying to slow things down. There is support below the current level at 0.7450 and 0.7414. Beyond that, I suspect we are going to crack below the 0.7400 mark.
My downside target remains at 0.7381, which is a recent swing low. I am betting on more USD momentum and that spells trouble for the Aussie.
The downward channel does have the potential for a bounce but there is still plenty of room for more downside to come, in the current move.