AUD/USD slides to new six-year low on RBA decision
James Chen July 8, 2015 12:18 AM
<p>AUD/USD (daily chart shown below) slid to a new six-year low slightly below 0.7400 on Tuesday after the Reserve Bank of Australia (RBA) announced that […]</p>
AUD/USD (daily chart shown below) slid to a new six-year low slightly below 0.7400 on Tuesday after the Reserve Bank of Australia (RBA) announced that it was holding its benchmark interest rates at 2%, a record low.
Several other factors have also contributed to the currency pair’s recent and ongoing weakness, not least of which include: concerns over the Chinese economy and its equity market plunge, lower commodity prices, and a persistently strong US dollar.
Additionally, late last year RBA Governor Glenn Stevens had stated that he preferred to see the AUD/USD exchange rate at 0.7500.
That psychological target was very recently hit when the currency pair gapped cleanly below this downside price objective on the open of this week’s trading. The exchange rate then fell even further on Tuesday after the noted RBA announcement, establishing a new long-term low at 0.7397 before rebounding.
Prior to this low being hit, AUD/USD had formed a large bearish flag pattern that spanned much of June. A breakdown then occurred in late June, pushing the currency pair into the current bearish continuation below the prior multi-year low of 0.7532 that was established in early April.
Both the long-term and short-term bearish trends continue to be pressured further to the downside by persistent fundamental factors noted above. Until some of these factors are alleviated, AUD/USD should continue to be weighted down, potentially towards further multi-year lows.
If the currency pair continues trading below the key 0.7500 level, the next major downside target is at the 0.7300 support level, with a possibility of continued declines towards the 0.7000 psychological level.
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