Aussie extends weakness on rising expectations for rate cut
The Australian dollar fell in European session to the lowest since 10 Jan, after brief recovery in Asia lost traction.
Fresh weakness comes in extension of Friday’s strong fall after bull stalled on Thursday and formed bull-trap reversal pattern on daily chart.
Bears pressure pivotal supports at 0.6860/50 (Fibo 61.8% of 0.6754/0.7032 / 8-10Jan higher base) and 0.6835 (daily cloud top / 100DMA), violation of which is expected to spark further retracement of of larger 0.6754/0.7032 rally.
Scenario is supported by strong bearish momentum, south-heading daily RSI/Stochastic and 10/200DMA death-cross), with firm US dollar adding to pressure.
Traders await release of key Australia labor report on Thursday, which would give more signals for RBA’s action on policy meeting on 4Feb.
Res: 0.6886; 0.6911; 0.6919; 0.6933
Sup: 0.6860; 0.6850; 0.6835; 0.6800