AUD/USD Current Price: 0.6865
- Plummeting commodity prices undermined demand for the Australian dollar.
- The market sentiment soured ahead of the US opening, and Wall Street closed in the red.
- AUD/USD has turned bearish and is currently pressuring a critical Fibonacci support level.
The AUD/USD pair resumed its decline on Tuesday and settled at around 0.6860, not far from its August low at 0.6840. The pair peaked at 0.6955 during London trading hours, helped by an improved market mood, as stocks rose and government bond yields retreated throughout the first half of the day. However, the market sentiment quickly turned to the worst ahead of the US opening, with the gloomy mood extending into the weekly close.
Not only did Wall Street edge lower, but commodity prices collapsed. Crude oil prices fell on news that Iran and the US have reached an agreement on the Iranian nuclear deal that would be announced in two or three weeks. Furthermore, Tehran reported exports had not been affected by political clashes in Baghdad. Gold prices also edged lower, adding extra pressure on the aussie.
Data-wise, Australia published July Building Permits, which fell by 17.2% MoM, much worse than anticipated. The country will release July Private Sector Credit and Q2 Construction Work Done on Wednesday.
AUD/USD short-term technical outlook
From a technical point of view, the AUD/USD pair is on the brink of breaking lower. The pair is pressuring a critical Fibonacci support level, the 61.8% retracement of the latest daily advance at 0.6855. The 20 SMA, in the meantime, accelerated its decline above the current level, converging with a Fibonacci resistance at 0.6960. Technical indicators offer firmly bearish slopes within negative levels, reflecting strong selling interest.
The 4-hour chart shows that further slides are likely, particularly on a break below 0.6840, the immediate support level. Technical indicators remain near oversold readings, while the pair plummeted after falling below a now bearish 20 SMA. A clear bearish breakout may push the pair towards the year low at 0.6680.
Support levels: 0.6840 0.6810 0.6770
Resistance levels: 0.6890 0.6925 0.6960
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