Commodity currencies fell like a ton of bricks, along with gold, and the Aussie-dollar has hit remarkable levels since it’s near 1.07 high just months prior. On Friday’s close, the pair currently resides at .9218 and closed higher than the 300+ pip decline surrounding the FOMC minutes. This goes to show traders that currencies can seem “overextended” or “oversold/bought” and can still continue on their marry way. All three of my previous targets for the year have been hit, and I am a little shocked in the due shiftiness of the decline with no real pullback outside of one-session squeezes. I still believe Aussie is bearish below .98, and this is what the charts tell me:
I extended the weekly chart to the global financial crisis levels of 2008/09 where the AUDUSD posted a low of .6006. In regards to the strong, strong bearish sentiment and current trajectory, the AUDUSD may be heading much lower. The price action broke all three moving averages, 20, 50, 200 EMA, with force but seem to find a little footing at the 38.2 Fib. level; however, I see only minor upside potential with a target around .9395.
If the 38.2 Fib. level does not hold given the stronger dollar, the troubled pair can easily slide to .8759 and .8537 (50% Fib. retracement of .6006 lows).
Aussie does have a propensity for the occasional short squeeze after a long drop, especially during London sessions. Although, there has not been one that was able to shift direction. The near-term upside target may prove correct in a squeeze scenario. Short-term traders may want to tighten stop-losses while long-term trend traders can adjust accordingly.
The Kiwi has been slightly more resilient until recently. NZDUSD has close below the 200 EMA, and it is likely to fall further to the 38.2 Fib. level which represents .7333. Potential resistance on any retrace may present itself around .791 while support on the downward move at .75; however, if the U.S. dollar is given back it’s reserve currency status, we can see further downside.