The AUD/USD major extended disappointing Australian retail sales-led slide and has now reversed all of Friday’s up-move.
Currently trading around mid-0.7600s, testing session lows, the pair came under some selling pressure on Monday after Australian monthly retail sales unexpectedly fell 0.1% in December, marking its first contraction in five months. The reading was also short of consensus estimates, anticipating a growth and down from previous month’s tepid growth of 0.1% (revised lower from 0.2% reported earlier).
Dismal retail sales data prompted traders to take some profit off the table against the backdrop of RBA monetary policy decision on Tuesday and repeated failures to clear 0.7700 round figure mark. Although the Australian central bank is expected to leave its key interest rates unchanged at 1.5% but the accompanying rate statement is expected to hint towards a dovish shift and might trigger a near-term corrective slide.
Technical levels to watch
A follow through selling pressure below session lows support near 0.7650 level is likely to extend the corrective slide towards 0.7600 handle below which a fresh leg of weakness could drag the pair back towards 0.7555-50 horizontal support. On the flip side, momentum back above 0.7680 level is likely assist the pair back towards 0.7700 handle, which if conquered has the potential to lift it to 0.7720-25 intermediate resistance, en-route 0.7760 strong hurdle.
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