FXstreet.com (London) - The Australia dollar has weaken significantly in early Asian trading, shedding over 50 pips. The RBA reiterated the 'greater flexibility' that the improving economy will offer the central bank over future policy. The market read this as a reduction in likelyhood of further rate hikes from the current level, 375bps. Accordingly invesotrs moved away from the dollar as RBA stressed the next rate decision would be 'marginal'.
AUD/USD currently trades at 0.9000, after dumping over fifty pips from the open of 0.9057. This is the lowest level the pair has traded since Nov 27. Accordingly the low of Nov 27 is our primary support level for the pair to brake its freefall, at 0.8943. In the unlikely case of a sudden reversal we see primary support at the consolidation level for this session, around 0.9065.
James Chen, of FX Solutions, expected this reversal as a breakdown of a triangle consolidation pattern at the 0.9063 level. The also sees secondary strong support at 0.8800: A strong breakdown of this triangle should lend strength to a potential bearish trend reversal of the previously-prevailing uptrend. In this event, the 0.8800 price region should serve as an initial downside support target.