AUD on a Free Fall as Iron Ore Plunges; AUD/USD, AUD/CAD First Targets Locked

The Australian dollar is still under strong pressure which endorsed from the sharp decline in the iron ore prices pushing the AUD/USD and AUD/CAD pairs to record consecutively fresh lows. The Australian economy is directly affected by the metal’s price as it consists the 20% of country’s total exports. Moreover, Australia has the biggest reserves of iron ore in the world which is more than two times the reserves of the second country in the row which is Russia, as per the data of 2016, as shown below. The iron ore has plunged more than 15% the last month to 75.00 USD a tone, the lowest level reached in the year





At the last policy meeting, on April 04[SUP]th[/SUP], the Reserve Bank of Australia left its cash rate on hold at 1.5% as it was widely expected, to be consistent with the sustainable growth in the economy and achieving inflation target over time. Following the decision’s announcement, Aussie had no reaction.

Tonight, National Australia Bank’s business confidence for March is coming out and tomorrow during the night, the Westpac consumer confidence for April. However, if the two indicators didn’t surprise with significant changes, are not expected to trigger much volatility in AUD cross pairs. On Thursday’s Asian session, the consumer inflation expectations for April and the Financial stability review will be closely watched. At the same time, the employment report for March is scheduled for release. The combination of the three significant reports will have a significant impact on the domestic currency.

AUD/USD Hit the 0.7500 Key Level; Remains Bearish
The Australian Dollar is developing in an ascending triangle against the U.S. dollar since last January of 2016 with strong resistance level at 0.7780 and a significant valid uptrend line. Over the last week, the AUD/USD pair slipped more than 1.6% and reached our suggested target at 0.7500 psychological level that we recommend in a previous analysis (see technical analysis here: RBA to Remain On Hold; AUD/USD & AUD/CAD Forecasts and Analysis). Now, the commodity currency is moving slightly lower and is approaching our second level at 0.7300 which is near with the uptrend line.

From a technical point of view, the price is trading below the three SMAs (50, 100 and 200) SMAs on the daily chart indicating further bearish movement. Technical indicators are strengthening its momentum for a downside move as there are following negative territories. The MACD oscillator plunged below both, zero and trigger lines while the RSI indicator almost entered the oversold zone.


AUD/CAD Profit Locked At 1.0200 - Next Target 0.9910
The AUD/CAD pair printed another red session, the third negative week in a row after the pullback on the 1.0340 resistance level. The price plummeted more than 1.5% until the 1.0200 support barrier, the first target we suggested in the previous analysis (see technical analysis here: RBA to Remain On Hold; AUD/USD & AUD/CAD Forecasts and Analysis). Also, the pair created a fresh two-month low and is ready to test the 100 and 200 SMAs on the daily chart as well as the 50.0% Fibonacci retracement level of the upward move with low on January 2017 and high on March 2017. The latter obstacles will be critical retracement levels for the bulls as the pair may fail to push the price further down. Even though, a successful penetration will drive the pair towards the 61.8% fibo level near 0.9910.

The technical structure suggests further downside movement as both are trading lower. The MACD oscillator is moving below the neutral area with strong momentum whilst the RSI indicator is pointing to south and is in progress to enter within the strong bearish area.


JFD Research