It was a risk-off day at the end of it all with equities slumping heavily and that kept the dollar firmer overall after a wild ride following the US CPI report release. The more negative risk mood is persisting through to today and that is weighing on commodity currencies with the aussie down 0.8% to below 0.6900 against the dollar.
This points to sellers solidifying a break below the pivotal 0.7000 mark and leaves plenty of room for downside exploration. The next key support level to watch is the 50.0 retracement level of the pandemic swing higher @ 0.6757. Beyond that, the 0.6500 level is arguably the next key psychological level for the pair.
If you're going by the technicals alone, the bleeding looks like it may continue for some time yet.
Even though bond yields are retreating from their recent highs, it looks to be a mix of flows and that will be a tough one to figure out until the dust settles in the months ahead.
But for now, it isn't quite hurting the dollar as much as one would think though sentiment for the greenback is also helped by slumping equities and a much weaker Chinese yuan in my view. The latter also doesn't lend much support for the aussie, so look out below.
