The Aussie dollar slipped to 0.7442 low in Asia, extending pullback from Tuesday’s spike high at 0.7517, where gains were capped by weekly cloud top, reinforced by falling weekly Tenkan-sen.
Fresh weakness came after Moody’s cut China’s sovereign rating and weaker than expected Australian data overnight (Construction work done fell by 0.7% in Q1, beating -0.2% forecast).
The pair managed to recover the largest part of overnight’s losses in late Asian/early Europe trading, however, risk of fresh weakness remains in play after Tuesday’s trading ended in Doji candle with very long upper shadow that could be seen as initial signal of recovery stall. Session low/daily Tenkan-sen/Fibo 38.2% of 0.7328/0.7517 mark first pivot at 0.7442, followed by converged 10/20SMA at 0.7432, break of which would generate stronger bearish signal and expose supports at 0.7400 (round-figure/Fibo 61.8%) and 0.7388 (17 May low).
Release of US data today may give fresh direction signals.
Res: 0.7482, 0.7500, 0.7517, 0.7534
Sup: 0.7456, 0.7442, 0.7432, 0.7400
