The Downside Break The RBA Have Been Waiting For

The Aussie moved dramatically to the downside last week (around 400 pips) with the Reserve Bank of Australia (RBA) finally being provided with a weaker currency, after stating for some time that the Aussie was “overvalued”.

Investors reacted negatively to Business Confidence not meeting expectations, with the following evening’s news that Westpac Consumer Confidence had unexpectedly declined encouraging further profit taking. From here, an unusual employment report suggesting that Australia had added nearly 10 times the expected number of jobs to its economy was met with confusion from investors.

As the week concluded, breaking news that the Australian Security Intelligence Organisation (ASIO) had raised Australia’s terror alert level to “high” encouraged additional bearish movement. Over the weekend, Tony Abbot, Australian Prime Minister, formally committed to providing Australian military assets to an international coalition against ISIS, which subsequently led to the AUD/USD declining to 0.89 for the first time since March.

The technicals on the Daily timeframe suggest the pair is currently withstanding heavy bearish pressure, with further support located at 0.8966. If the pair is going to attempt to recover sudden losses, resistance can be found at 0.9018.


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