AUD/USD: fresh lows in bearish territory below 0.7200

AUD/USD has made fresh lows in the Tokyo session, penetrating towards the 25th May lows of 0.7160.

Aussie home sales dropped to from 8.9% to -4.7% in April creating offers to start the week's docket off in negative territory while we await retail sales and GDP before nonfarm payrolls on Friday. 

As noted by analysts at ANZ, leveraged funds pared back on their net longs in commodity currencies across the board, but most notably in the AUD, by USD1bn to take net AUD longs to USD0.9bn, the lowest in eleven weeks. Overall, the Greenback is back in favour with a slight improvement in Q1 GDP that was revised from 0.5% to 0.8%, although missing expectations and limiting the bid in comments from FED's Chair Yellen who said that a rate-hike is due “in the coming months”. The divergence between the RBA and what the FOMC is saying is weighing heavily on the Aussie while commodities struggle to keep the momentum up. 

AUD/USD levels

The Aussie is back below the end of 2015 levels with a target of the January lows of 0.68 where it then bounced to 0.78 in April.  Valeria Bednarik, chief analyst at FXStreet explained that on a daily basis, the 20 SMA heads sharply lower around 0.7280, while the Momentum indicator turned south below its 100 level and the RSI indicator consolidates near oversold territory, all in line with further declines. 

"In the shorter term, the 4 hours chart presents a neutral-to-bearish stance, with the price below a horizontal 20 SMA, and the technical indicators heading nowhere right below their mid-lines. The pair set a weekly low at 0.7144, and a break below it should see the decline extending quickly towards the 0.7100 figure, en route to the mentioned 0.7000 figure."