Initial Rally Gives Way To Further Losses

Further gains in the greenback pressured AUD/USD lower on Monday, the pair finished the day at 0.7650, the pair last up 7 pips at 0.7657. USD has now rallied for four straight days, and the most recent gains also knocked the wind out of the latest oil rally, which weighed further on AUD.

• The pair has fallen from highs of 0.8007 as recently as Feb 25, a decline of over 4.5%, CBA says the rate could have further to go: "The risk in the near‑term is that AUD moves nearer our end‑March forecast of 0.76. While the bond rout is pulling AUD lower, the medium term fundamentals of high commodity prices will eventually push it higher in our view."
• From a technical perspective AUD/USD remains vulnerable following the sharp sell-off from 0.8007, Feb 25 high. Weakness on Friday reinforced bearish conditions which saw prices fall through support at 0.7693, Feb 26 low. This signals scope for a stronger move lower and opens 0.7564, Feb 2 low. Firm short-term resistance has been defined at 0.7838, high Mar 2 and 3. A break would allow for a stronger short-term rally.
• Markets look ahead to NAB Business Confidence data at 0030GMT/1130AEDT, while broader focus falls on a speech from RBA Governor Lowe tomorrow.