The AUD/USD drops like a rock on the short term and seems poised to reach fresh new lows. The USD has taken full control as the USDX rallies and seems poised to reach new highs. The pair has reached an important support level, so only a valid breakdown will confirm a further drop.

I’ve said in the previous weeks that the rate could approach and reach this level after the false breakout above a dynamic resistance.

USDX is pressuring a very strong dynamic resistance, so only a valid breakout will signal a further increase. The dollar index could find a strong resistance near the 92.50 and near the 92.80 level again.

The Aussie dropped even if the RBA has left the Cash Rate unchanged in the morning. The interest rate stays at 1.50% since August 2016. The IAG Manufacturing Index decreased from 63.1 to 58.3 points, while the Commodity Prices drop by 1.4%, versus a 2.8% drop in the former reading period.

USDX is pressuring the first warning line (wl1) of the ascending pitchfork and it could approach and reach the upper median line (UML) of the descending pitchfork. The current increase is natural after the failure to retest the broken sliding parallel line.

It should be attracted by the median line (ML) of the ascending pitchfork after the last two failures to reach and retest the LML.

The AUD/USD harasses the median line (ML) of the major black descending pitchfork and it could pressure the 0.7500 psychological level as well. A valid breakdown below these levels will confirm a further drop in the upcoming period. The next major downside target will be at the upper median line (uml) of the minor descending pitchfork.

Right now is hard to believe that we may have a drop towards the lower median line (LML) of the major descending pitchfork. This scenario could take shape in time if the rate will stabilize below the median line.