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AUD faces mounting pressure

FXstreet.com (Córdoba) - The Australian dollar deepened its fall on Monday as weaker-than-expected Chinese data added to concerns raised by US numbers about the global economic outlook.

Gold and silver are leading declines in broader risk markets. The yellow metal plunged over $140 an ounce and hit a 2-year low of $1355, while silver lost 12%. Wall Street indexes were also hurt by poor Chinese GDP and traded with losses between 0.8% and 1.3%.

Against this backdrop, the Aussie was hammered to a low of 1.0375, leaving several support levels behind and opening the way for more slides.

Regarding stocks and commodities sell-off, the TD securities team had questioned their outlook amid renewed signs that the US economy was heading into another Spring 'soft patch'. "Those concerns remain valid and this week’s US data run (including April regional activity surveys) could exacerbate some of the trends unfolding in the markets by encouraging a little more risk aversion", they say.

According to TD Securities, with precious metals under severe pressure and safe-havens few and far between in FX land these days, the USD is a natural beneficiary of developments. "Growth worries and lower commodity prices are clearly big negatives for the fully-valued commodity currencies".

Technically speaking, AUD/USD outlook has turned bearish in short-term charts, although in the longer run the pair holds a bullish tone. With indicators correcting after reaching oversold levels, the pair may see some consolidation or even a bounce before resuming the fall.

Having broken below the 100-day SMA (1.015), the 1.0400 psychological level and the 200-day SMA (1.0393), the 1.0350/45 area (April lows) stands as next support in line for the cross. On the upside, bounces could find initial resistance at the 200-day SMA, followed by the 1.0500/10 area (psychological level/100-hour SMA).

Karen Jones, analyst at Commerzbank, notes that last week rise to 1.0517 was a "false break". "We note the doji charted 11th April and the divergence of the daily RSI, and the sharp selloff seen overnight, all of which suggest that the break higher was false", the analyst commented.

Jones locates next support at 1.0348/49 (last week's low and 50% retracement). "Failure at 1.0348 is needed to negate upside pressure and trigger a slide to 1.0300 then 1.0204, the 11th March low en route to the 1.0116 recent low".

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