The AUD/USD looks under a bit of pressure and comments from the RBA did the bulls no favours. We may see a pull back from the recent movement, however, a touch of the bearish trend line should see a strong movement downwards.
Data out today from China helped the Aussie dollar to maintain its bearish channel. The HSBC Manufacturing PMI showed a reading of 50.3, down from 51.7 a month ago and well below the 51.5 the market had anticipated. The impact comes as no surprise given the nature of Australia’s mining led economy and its reliance on exports to China.
Yesterday we saw the Reserve Bank of Australia Governor Glenn Stevens give a speech. He said he believed the Aussie dollar had further to fall and he was becoming concerned about the unemployment rate. He also told parliament that low interest rates were not enough, indicating they will stay low for some time.
From a technical point of view the bearish channel is looking rather solid on the H4 chart. The price looks likely to break through the bottom of the ranging channel it has been following for the past three months. We could see the price use this as support, however, the bearish sentiment looks strong as we see on the below daily chart.
The MACD is certainly still looking bearish and it would pay to wait for the price to break through the larger channel before taking this pair short. Once confirmed, levels of support can be found at 0.9206, 0.9138 and 0.8995 and may act as possible exit points, with the bearish channel acting as dynamic support. If the price bounces higher it will find resistance at 0.9273 and 0.9343, with the upper level of the bearish channel acting as dynamic resistance.
The Aussie dollar is looking rather bearish at the moment and a bearish channel has confirmed this. Look for a breakout of the larger channel before a serious movement to the downside.