The Australian Dollar (AUD) fell sharply against the US Dollar (USD) on Wednesday, decreasing the price of AUDUSD to less than 0.7450 after the release of some key economic news. The technical bias remains bearish because of a lower low in the recent downside wave.
As of this writing, the pair is being traded near 0.7434. A support may be noted around 0.7420, the horizontal support area ahead of 0.7310, the swing low of the last major downside move. A break and daily closing below the 0.7310 support shall incite renewed selling interest, validating a downside move towards the 0.6826 which is swing low of the last major fall on monthly timeframe.
On the upside, the pair is expected to face a hurdle near 0.7442, the short term horizontal resistance ahead of 0.7500, the confluence of a major horizontal resistance area as well as psychological number and then 0.7733, another critical resistance zone on the daily chart. The technical bias shall remain bearish as long as the 0.7778 resistance area is intact.
Shocking GDP Number
Australia’s gross domestic product has declined by 0.5 percent in the September quarter, which is its first decline since March 2011 and its worst since the global financial crisis. The economy shrank to post its worst performance since the 2008-2009 GFC, according to the Australian Bureau of Statistics (ABS) data released at 11.30am AEDT today. The last contraction was in March 2011, after the devastating Queensland floods and overseas natural disasters. Two consecutive quarters of negative economic growth constitutes a recession, the last of which happened 25 years ago.
Considering the overall outlook, selling the AUDUSD pair on short term rallies appears to be a good strategy.