Australian Dollar Falls Through Support

by on November 21, 2013 6:20 pm GMT

The AUDUSD has seen a great deal of pressure since yesterday’s FOMC minutes and dollar strength, greatly caused by the European Central Bank (ECB) opting for potential cuts in the deposit rate. The Chinese Flash Manufacturing Index came in lower than expected at 50.4, analysts expected 50.9.

The AUDUSD fell through price action support around .9295 and is sinking below .9240. This pair has followed technical very well in regards to a Fibonacci retracement from the year’s high of 1.0597 and low of .8847. After failure to break the 50 percent retracement, the AUDUSD fell below the 61.8 level. It then found resistance here and fell lower. Currently, the pair found short-term support at the 78.6 percent Fib.

The pressure is mounting for Aussie in the wake of new economic data. The International Monetary Fund (IMF) also suggested that the Australian dollar is ten percent overvalued.

There is a 20/50 EMA crossover on the daily chart that can provide further bearish technical sentiment.

A pullback, given the massive decline, could provide a short-term swing to .9275. However, if the pair remains at the lower-end of the range, or breaks through the current Fib. level, there is a likelihood of  falling to .916.

1D Chart of AUDUSD

1D Chart of AUDUSD