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Forex: The Aussie has lost a further 40 pips in London

FXstreet.com (London) - The Aussie has lost a further 40 pips in London. Traders have pushed through the over night lows of where business was done at 1.0178, after the sell-off in Asia when RBA in fact decided to cut by 25 basis points.

The RBA, following in suit of the ECB, were able to cut because of recently low inflation data.

'Inflation may even allow further easing.' Said Kit Juckes, SOCIETE GENERALE.

She went on to say,' the currency is overvalued and supported only by risk-on (SPX), commodities and rates/yields. As two of the three pillars holding it up come down, it is only a matter of time before a return to the mid-90s is seen'.

In her opinion, a rate cut was widely expected, which may have given the pair less of a hammering. 2yr swap rates were already coming in below 2.8% on Friday and also commodity prices in copper probably helped the pair to cover back some lost ground over night to 1.0211. Australia also saw the publication of trade balance data, with a decent turnaround from a deficit of -$A111m to a surplus of +$A307m in March, while market consensus was flat.

The low has been 1.0167 where it is currently holding up on the 5-minute charts into a doji formation building as a continuation higher from this sessions low. The pair is keeping above the supported area, the March low, and daily candle reading of 1.0116 followed by 0.9897 (high Mar.29).

A run of 1.0221 (April low) may open up 1.0340 (MA55d).

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