The AUD/USD currency pair trended lower toward to the 0.6600 mark in the European session on Wednesday, after recovering from a four-month low near 0.6565. After its worst daily loss since February 3, the Aussie pair bounces off a support level that has been falling for two weeks.

After the AUD/USD pair broke through 0.6700, it went down because of technical reasons. Even though short-term indicators show that the pair is oversold, it has not stabilised. Below 0.6600, the next support is at 0.6530/40, according to the daily chart.

If the AUD/USD pair goes back up to 0.6630, traders may decide to sell. A strong bounce back above 0.6630 should lead to a period of stability before the next leg down. As long as the pair stays below 0.6780, it is a bad sign.

“The RBA’s decision on March 7 to reverse its hawkish turn because of domestic political pressures points to ongoing concerns about credibility and makes AUD the new GBP.

With the RBA’s outlook being fundamentally questioned and more pressure on the Fed to tighten monetary policy, we are no longer bullish on the AUD. Instead, we expect negative AUD/USD risks to reach as high as 0.6400 by the end of the quarter.”

Mann, a “hawk” on the Monetary Policy Committee who wants faster rate hikes, broke with tradition last night by saying that the British pound will likely continue to fall against the USD and euro, which are important counterparts. This shows that monetary policy expectations are becoming more different. Mann wants the Bank of England to keep up with the European Central Bank and the Federal Reserve, but her fellow committee members seem happy to take a more cautious approach to future rate hikes because they are worried that inflation pressures may have reached their peak.

Trade Idea

There are many ways to get Aussie pair bears to move around 0.6540-20.