RBA decision. Commodities. Dollar strength send the pair lower.
The RBA decision last night sent the AUDUSD tumbling lower. Governor Stevens reiterated that the currency was still overvalued and needed to be weaker. Concerns about China. The dollar buying today, technical selling in the pair and lower iron ore/commodity prices has also played a part. Below is the chart of iron ore and it is showing a continued tumble lower in July as China stocks fall.
Technically, the AUDUSD price fell to a lower low (going back to May 2009) and continued the probe below the 0.7500 level that was cracked yesterday (the price closed at 0.74978 yesterday). Governor Stevens back in December said the fair value of the AUDUSD was around 0.7500. Yesterday was the first break below that level.
Looking at the hourly chart, the low today was moved below a trend line connecting the June 29 low with the July 6 low (see chart above). The price has rebounded off that break and the price is back above that line (currently at 0.7416). Stay above and the buyers/correction might have more to run.
The 5 minute chart below shows the bounce off the lows has taken the price above the 38.2-50% of the post plunge high to the NY session low (at 0.7415-205). The pair did hold below the 100 bar MA on the same chart (see blue line). So the water - at these levels - is a bit more muddy. The trend-like action seems to be taking a breather.. Watch for support at the 0.7416 as the market digests the latest move.
