Attempted Recovery Short Lived

The recovery attempt for AUD/USD was short lived; as European participants arrived the pair sold off and continued its move lower, touching 0.7540 which is just 8 pips above the 2021 low, before recovering slightly. The pair last up 3 pips at 0.7555.

• From a technical perspective AUD/USD broke to fresh lows Thursday and has touched 0.7558 in the process. The break of support at 0.7646, Jun 3 low reinforces a bearish theme and opens losses toward the 200-dma at 0.7552. 0.7532, Apr 1 low marks key support. On the upside, initial resistance is at 0.7716, Wednesday's high where a break would ease bearish pressure and expose 0.7776, the Jun 11 high and 0.7813, May 18 high.
• There are no data releases on the economic docket today. Given the lack of catalysts on the schedule CBA believes AUD will trade as a function of the greenback: "In contrast to the FOMC, the RBA remains firmly dovish. In a speech yesterday, RBA Governor Philip Lowe reinforced that the RBA doesn't believe economic conditions for a rate hike will be met until at least 2024. The growing divergence between the RBA's dovish stance and most other central banks we monitor is a headwind to AUD. If the RBA maintains its dovish outlook in July, the risk is AUD will take longer to lift and may not reach our forecast peak of 0.83 (end Q3 21)."