The Australian dollar is also a victim of the dollar’s strength. The recent wave took the Aussie under the support line, despite a rate hike. What’s on the road ahead?
AUD/USD now trades at 0.8920, below the 0.8950 support line. Fresh dollar strength sent it below this line, sending it to levels last seen at the beginning of October. 0.8950 then served as a resistance line that Aussie bounced off, before continuing north. This line also served as a support line in 2008, and a resistance line in 2007.
Australia was the first country in the West to raise the interest rates last month in a surprising move. I then asked which country will be next. Tonight, Australia made a second move. Another 0.25% rate hike sent the Cash Rate to 3.5%, far above the next highest rate from New Zealand (2.5%) and much higher than the American, British and European rates.
But this time, the move was anticipated. Some economists were even thinking of a whopping 0.5% rate raise. The decision was accompanied by a rather dovish rate statement – Glenn Stevens’ RBA will be rather cautious with the next moves. A rate hike in December isn’t expected. This weakened the Aussie immediately after the decision.
A few hours later, this weakening turned into a downfall. This move can be “blamed†only on the dollar. The new wave swept the Aussie down under. It’s not alone: EUR/USD is at 1.4636, below last week’s levels, after failing to breach the resistance line yesterday. USD/CHF is above 1.03, and other currencies are also giving in to the dollar.
The British Pound is weathering this storm quite well, remaining above 1.63. Forexlive reports about the Reserve Bank of India buying lots of Pounds.
The road down includes a minor support line at 0.8867, which served as resistance line not long ago. Below, 0.85 is a major support line, that stopped the Aussie for a long time.
Further reading:
- Mohammed Isah’s fresh technical analysis for AUD/USD.
- AUD/USD Forecast – For the rest of this week’s events. There are many…
