The Aussie dollar was sharply lower in Asia after softer than expected inflation numbers in Q3.
Consumer Price Index rose 1.8% y/y, missing forecast at 2.0% and Q2 release at 1.9%, while headline CPI rose 0.6% in Q3 from 0.2% in Q2, missing forecast at 0.8%
Inflation in Australia continues to undershoot RBA’s target of 2%-3% band, suggesting that the RBA may stay on hold further.
The AUDUSD pair was down 0.7% in Asia, staying firmly in red for the fourth straight day.
Fresh weakness broke below pivotal supports at 0.7732/26 (06 Oct former low / 50% retracement of 0.7328/0.8124 upleg) which could trigger significant downside in coming days.
Close below 0.7732 is needed to confirm break and open way towards 200SMA (currently at 0.7692) and double-Fibonacci support at 0.7630 (Fibo 61.8% of 0.7328/0.8124 / Fibo 38.2% of 0.6825/0.8124) in extension.
Anticipate consolidative/ corrective action in the near term as slow stochastic is deeply oversold on daily chart and RSI is approaching oversold territory.
Overall picture remains bearish and sees corrective upticks as selling opportunities.
Broken 0.7732 pivot now acts as immediate resistance, followed by session high at 0.7783 and falling Tenkan-sen (0.7805) which is expected to cap corrective action, before bears resume.
Res: 0.7732, 0.7783, 0.7805, 0.7822
Sup: 0.7692, 0.7675, 0.7630, 0.7600
