Originally published by AxiTrader
Ouch.
The Australian dollar was - along with its commodity bloc cousins - hammered overnight losing 0.84% as it slipped below 78 cents.
That's taken the Aussie back down toward last week's low and the convergence of the 100 and 200 day moving averages, which sit around 0.7776.
Critically that means the 0.7758/0/7776 zone is now vitally important for the medium-term outlook for the AUD/USD and a break of same could precipitate a cascade lower toward 0.7580/0.7615.
I'm sure regular readers could almost write this next sentence for me. But I have to say that the Aussie, and kiwi, Canadian dollar, rand, real, and Mexican peso, are all under pressure from the double whammy impact that US dollar strength has on commodities and then the negative feedback loop that has on this broader spectrum of commodity currencies.
As it stands this morning we have risk appetite off as stocks in the US collapse into the close with the S&P 500 down 1.27% to 2,744. We have gold and copper down more than 1%. And we have the prospect of a risk-off kind of day in Asia markets today.
So I don't hold out a lot of hope for the AUD/USD to be able to hold any rallies we may see back above 78 cents.
Indeed my focus is on a test and break of 0.7850/58 and then a run toward 76 cents.
Have a great day's trading.