Australian Dollar Price Outlook: AUD/USD Breaks Down, Nears Key Support
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Aussie, AUD/USD, Australian Dollar Price Analysis
- AUD/USD is nearing a test of a critical support zone around the .6700 psychological level.
- This zone held four separate support tests last year despite the pair’s print of decade-lows.
- RBA rate cut potential keeps Aussie as an option for long-USD strategies or scenarios.
AUD/USD Breaks Down Even with USD-Weakness
It’s been a busy day of price action in the FX market as a bit of volatility has continued to price-in after yesterday’s FOMC rate decision and this morning’s BoE meeting. The net response has been a rush of USD-weakness after the currency put in a strong month of January; which saw more than 50% of the Q4 sell-off erased.
Despite this recent incursion of USD-weakness, the Australian Dollar has been even weaker, highlighted by the fact that AUD/USD has fallen down for a test of a key support zone that thwarted bears multiple times last year. This shows around the .6700 level, and last year saw this zone tested on four separate occasions from August through October. With price action nearing yet another test, the big question is whether bears can retain control sub-.6700.
AUD/USD Daily Price Chart
At this point, AUD/USD can remain attractive for long-USD scenarios, particularly given the fact that the pair has continued to fall even as DXY has put in its own bearish themes. What will remain as a challenge, however, is the prospect of entry, as price action nears a zone of support that proved very tough to break last year.
This can open the door to either pullbacks for bearish trend strategies; or prints of fresh lows to open the door for breakout strategies.
The ten-year-low in the pair resides around .6671 and prints below this level open the door for deeper breakdown potential. On the potential resistance side of the coin, there are a few areas of interest that could be repurposed for as such.
The prior swing-highs around .6763-.6771 could offer such potential, and a bit higher is a zone of prior support, running from the approximate .6823 up to .6846. This could be looked at as an ‘r2’ zone of resistance for bearish trend continuation scenarios in the pair.
AUD/USD Hourly Price Chart
Chart prepared by James Stanley; AUDUSD on Tradingview
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.