The Australian dollar bears are taking the currency down under. Even though the central bank is more likely to refrain from rate cuts and might even hike the interest later in the year, the sellers are beating the buyers.
The fresh low is 0.8731, a level last seen in July 2010, 3 and a half years ago. What are the next support levels? We have to look back to 2010.
The effect of the much stronger than expected CPI is already well behind us. The Aussie rose on the announcement but began losing air after less than 24 hours.
And then, the weak Chinese PMI, that showed minor contraction for the first time in 6 months, it began digging lower. The move accelerated with the drop under the previous low of 0.8756.
Here is a weekly chart of AUD/USD where we can see the next lines of support:
0.8580 was the low of February 2010, nearly 4 years away, and is very serious support. The next line is also strong: 0.8315 was a double bottom in June 2010. And the last line was a multiple bottom: 0.8066, seen during May and June 2010. Below this levels seen in July 2009.
Looking up, 0.8767 provides minor resistance. It is followed by 0.8850 and the round and tricky level of 0.90.
For more levels, events and analysis, see the A$ forecast.
