More Pain Down Under?
Today’s Spotlight Market
The Australian Dollar looked as though it may have been on the verge of gaining some traction earlier this month, but the currency abruptly turned around mid-month.? The Aussie posted a close above resistance near the 0.8050 level and it looked as though there may be something to build on, technically, but the currency closed back below the resistance level the next day, signaling a failed breakout.? The currency has not had a single positive day since the failed breakout.? There have been some mixed signals in the short-term rate direction in Australia, which has created a cloudy outlook for currency traders.
Fundamentals
Australian banks have curbed investment lending in Australia, which could keep housing prices depressed.? This could force the Reserve Bank?s hand to lower interest rates, making the currency less attractive to investors.? While home prices are important, being the main source of wealth for many households, it may not be the only reason for the RBA to lower rates.? Economic activity has been extremely lackluster following the end of the China-driven mining boom.? The Australian economy faces the possibility of a recession for the first time in over 24 years!? Some economists peg the likelihood of a recession at over 50%, which could end the unprecedented 24 years of expansion for the land ?Down Under.?? The lone bright spot for the Australian economy has been a shaky job market, which has staved off an outright collapse. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the June Australian Dollar contract closing above the aforementioned 0.8050 resistance level on May 13th, only to form a gravestone doji on May 14th.? Prices have moved straight down since the reversal, closing below the major moving averages.? The close below the 20-day moving average suggests that a near-term low may be in place.? If prices are unable to hold near-term support near the 0.7682 mark, there is a chance of the market testing the pivotal 0.7500 level.? The RSI is nearing oversold levels, which may offer some semblance of support in the near-term.
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