Article by ForexTime
Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe unsettled investors last week and sent the Aussie crashing through its critical 0.8540 support level when he stressed the Aussie is set to decline in line with commodity prices. Traders taking profit on the USD ahead of Thanksgiving holidays led to the bulls gaining some momentum, before the OPEC decision not to cut Oil production inspired the bears to return and led to the Aussie concluding the week at its lowest level in over four years.
From a technical standpoint, this pair looks weak and with there being further major event risks for the Aussie this week, the downside momentum may not be over quite yet. On Tuesday, the latest RBA Interest Rate Decision is announced. Although the RBA are expected to leave monetary policy unchanged, any further indications of the RBA cutting interest rates at some point next year will provide momentum for the bears to send the Aussie lower. On Wednesday, Australian GDP is announced; the RBA warned as far back as April that the Australian economy was set to enter a weaker period of growth and any indications of these claims being validated would again mount pressure on the Aussie.
The strongest chances of the Aussie recovering losses would likely rest upon the GDP being stronger than expected, or USD profit-taking resurfacing again. The US Non-Farm Payroll data release concludes the week on Friday, with any potential Dollar weakness likely to appreciate the Aussie. In the meantime, the Aussie looks bearish and likely to fall further. If this happens, support can be found at 0.8417, 0.8370 and 0.8316.
Written by Jameel Ahmad, Chief Market Analyst at FXTM.
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