AUD/USD approaches key support levels, what next?
AUD/USD falls to near the 100 and 200-day MA levels
The AUD/USD has fallen from grace in the past two weeks as support levels gave way rather easily, but we're now reaching the more critical support levels for the pair.
If sellers are able to break below, the already near-term bearish sentiment would turn really bad for buyers. And the fall after the break will open up a move back towards 0.7500 again.
At the moment, risk sentiment is the main driving force behind markets and that doesn't bode well for the aussie and for commodities - which the aussie sentiment relies on as well. But more so, recent data points such as yet another trade balance deficit and poor December retail sales aren't really helping the case for a stronger aussie either.
Adding the uncertainty of the RBA in not knowing when the next rate hike will be, there's not much to suggest that the AUD should move higher for the time being.
Perhaps it's time that the AUD/USD start playing catch up with the recent disparity in correlation with yield spreads?