Currently, the USD is strengthening against almost all currencies except for the GBP. The Fed’s intention to cut interest rates by the end of this year additionally supported the US currency.
The decrease in iron ore prices and the recent fall in Chinese stock markets affected the Australian dollar. Some economists believe that in November RBA may cut interest rates. Thus, amid the US dollar strengthening and the Fed's policy, in the medium term, the Australian dollar will be under pressure in the AUD/USD pair.
Market participants are waiting for the Inflation Rate and Consumer Price Index publication in Australia, due at 04:30 a.m. (GMT +3) on Wednesday. The figures are expected to remain unchanged.
Today at 3:30 p.m. (GMT +3), the US (Consumer Price Index for June and Building Permits for May) and Canadian (Consumer Price Index for June) statistics are released.
Support and resistance
Since mid-2011 the AUD/USD keeps falling from the level of 1.1000. The nearest target levels are 0.7100-0.7000 (2006 lows).
In early July, the pair broke through the strong support levels 0.7530-0.7590 (March lows).
OsMA and Stochastic indicators on the timeframes, from the 4-hour to the monthly, signal further decline, which is also supported by the fundamental factors.
Support levels: 0.7350, 0.7320, 0.7220.
Resistance levels: 0.7450, 0.7530, 0.7590.
Open short positions from the current price or from 0.7410, 0.7430, 0.7450 with targets at 0.7380, 0.7320, 0.7300, 0.7220 and stop-loss at 0.7480.
If indicators give appropriate signals, after the breakout of 0.7590 the price may rise first to 0.7700 initially, 0.7720 and then to 0.7850, 0.8000.