The AUD/USD has been in free fall for the past few weeks as a result of falling commodity prices and an RBA intervention. Whilst the voracity of the last few slips pale in comparison to previous weeks, there could still be some downside potential for those bears which missed out on the initial reversal. Specifically, this week RBA Governor Stevens has another opportunity to Jawbone the pair which he may very well do if he believes the AUD hasn't slid quite far enough.
The Aussie dollar began last week by rallying on the back of softer US results which were released over the weekend. Additionally, a contraction in the US Empire State Manufacturing index of 9.0 helped to buoy the pair throughout the Tuesday Session. However, stronger than expected US results posted on Wednesday and a hawkish FOMC minutes release sent the Aussie spiralling lower. Ultimately, the pair was unable to recover from the slip to 0.7222 as a result of mixed Australian employment data which was released later in the week. Specifically, any buying pressure generated by the better than predicted 5.7% Unemployment rate was offset by the weak 10.8K Employment change result.
As for this week, the AUD/USD will likely be subject to some sentiment trading early on as a result of RBA Governor Stevens making another announcement. Consequently, the market will be attempting to gauge if the Governor is satisfied with the Aussie's recent tumbles or if he seeks to push the pair lower still. However, keep a close watch on US Unemployment results later in the week as they could provide further selling pressure even if Stevens doesn’t attempt to Jawbone the AUD/USD Lower.
On the technical front, the Aussie dollar is continuing its recent bearishness and the downtrend seems to be in full swing. Additionally, the 100 day EMA has now crossed the 20 day EMA which could signal that the AUD may not be done tumbling just yet. Moreover, the pair is now forming a rather narrow bearish channel and is currently testing the upper constraint of said channel. Consequently, the pair should be looking to make a move lower in the next couple of days. However, keep in mind that the RSI and stochastic oscillators are verging on oversold which may cap downside potential for the pair this week.
Ultimately, this week is more than likely going to be dominated by sentiment rather than fundamental or technical manoeuvres. Given the recent bearishness of the Aussie, the market should remain sceptical of any potential recovery for the pair. Additionally, it remains a probable scenario that Stevens uses his impending announcement to drop the pair once again to assist struggling Australian Exporters.