AUD/USD drops further to test 0.7900 on notable USD demand

The AUD/USD pair failed to take on the Asian recovery above 0.7950 levels, and from there resumed its recent bearish momentum, now accelerating declines to test 0.7900 support.

AUD/USD awaits Yellen for fresh impetus

The spot remains heavily offered in Europe, in response to the growing bid tone seen behind the US dollar against its main competitors, as markets seek to book profits on their USD shorts ahead of the Fed Chair Yellen’s speech. Yellen’s remarks on the interest rates outlook are likely to trigger huge volatility across the fx markets.     

The latest leg down in the Aussie can be also partly attributed to renewed weakness seen in oil and gold prices, while the latest headlines from China’s Foreign Minister on North Korea also spooks markets again, weighing down on the higher-yielding currency AUD.

Meanwhile, the AUD markets ignored the Australian Treasury revising lower 2016/2017 cash deficit, as the overall market sentiment remains driven by the USD price-action.

Iron-ore prices to fall to $60/metric ton by 2017-end – Goldman Sachs

AUD/USD Technical View    

Slobodan Drvenica at Windsor Brokers Ltd, explains, “Fresh bears are on track to fully retrace last Friday's recovery which was capped at 0.7986, as the price returned below cracked Fibo support at 0.7929 (Fibo 61.8% of 0.7807/0.8124 upleg) Pressure on cloud top which underpinned the action in past few weeks is rising and eventual penetration into daily cloud (spanned between 0.7905 and 0.7794) would signal further easing.”

“Bearish setup of daily MA's and Momentum studies in the negative territory are supportive, however, bears may show hesitation at cloud top as slow stochastic is oversold on daily chart. Corrective upticks are expected to be limited and offer selling opportunities while key barriers at 0.8000 zone (converged daily Kijun-sen/Tenkan-sen) stay intact. Only sustained break here would neutralize and provide fresh bullish signal,” Slobodan adds.