FxWirePro short term outlook: Aussie may go for 0.7 support test if fails to clear key resistance

The Australian dollar has been showing extraordinary resilience in the face of stronger dollar and lower rates from the Reserve Bank of Australia (RBA), On August 2nd, RBA decided to cut rates by 25 basis points after recent data showed lower inflationary pressure in the Australian economy but that move failed to weaken the Aussie despite a better than expected jobs report from the United States.

We have an active bullish call on Aussie to buy at 0.75 area with a stop loss around 0.71 area and targets around 0.81 against the dollar. The call is within the money with more than 100 pips gain, however, in recent trading, Aussie has been struggling to break above key resistance. Continued weakness in the commodities sector, expectations of further cut and a stronger dollar seems to be taking its toll. Hence, we are urging caution against out bull call.

Aussie has been struggling to break free of the 0.765-0.78 region and if continues to fail we are afraid that greater downside might open up for the pair in search of a support. At the first, Aussie is likely to test supports around 0.74 and 0.73 area but a failure to find would push the pair towards 0.7 support test.