Brocker.Org: AUD/USD tumbles to fresh 4-month lows ahead of Australian annual budget


The AUD/USD pair prolonged last week’s sharp rejection move from the very important 200-day SMA hurdle and dropped to fresh four-month lows during early European session.

The pair remained under intense selling pressure and the latest leg of downslide could be attributed to disappointing release of Australian retail sales data. Data released on Tuesday showed retail sales unexpectedly contracted 0.1% m-o-m in March and adding to the weak reading, February’s drop was revised even lower to -0.2% from 0.1% reported earlier.

   •  Australia: Retail sales continue to weaken – ANZ

Against the backdrop of Monday’s weak Chinese import figures, disappointing domestic data, including yesterday’s building permits, weighed heavily on the Australian Dollar. 

Meanwhile, the prevalent bearish sentiment surrounding copper prices did little to extend any immediate respite for the commodity-linked currencies. This coupled with continuous up-surge in the US treasury bond yields, always backed by rising bets for an eventual Fed rate-hike action in June, further dented demand for higher-yielding currencies – like the Aussie, and collaborated to the pair’s ongoing bearish slide to the lowest level since Jan. 10.

Investors now look forward to the Australian annual budget release, due during the European session, while from the US JOLTS job openings data might provide some impetus during early NA session.

   •  Australia’s annual budget preview – NAB

Technical levels to watch

A follow through weakness below 0.7330 level seems to drag the pair towards the 0.7300 handle, below which the pair would turn vulnerable to extend its bearish trajectory further towards testing 0.7220-15 support in the near-term. 

On the upside, any recovery attempts might now confront immediate resistance near 0.7365-70 area, which if cleared could lift the pair back towards the 0.7400 handle. Any subsequent recovery beyond the said handle now seems to be capped at 0.7425-30 strong horizontal resistance.