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Forex Flash: The break in AUD below 1.0150 is significant - RBS

FXstreet.com (Barcelona) - The AUD/USD closed the session sharply lower, down 85 pips at 1.0091. This was the lowest daily close the pair has seen since June 2012, and some analysts believe it could be a sign of further weakness to come.

According to analysts at RBS, "Our forecast has remained for the AUD to reach to 0.98 by year end. The rationale is a stronger USD on a building US recovery and eventual QE policy tapering, and a weaker Chinese economic outlook and peaking in the mining investment boom in Australia. The break in AUD below 1.0150 is significant. It was hovering above this level in recent days following the RBA rate cut on Tuesday, with several attempts to break lower. It bounced from this level after the stronger than excepted Australian labour force data yesterday. And it was importantly around the lows that were tested a few times since mid-2012"

They went on to add, "Looking at the longer term chart, the AUD made a peak in 2011, and all subsequent peaks in a largely sideways range have been lower; a sign of potential peaking. The move to a new low in the last six months is further evidence of that peaking. The conditions for a rapid fall are not in place, and there will be supports and various levels, including the 1.00 psychological level, previous lows in 2011 and 2012 in the mid-90s. The wedging support line shown in the chart below currently comes in at around 0.99. But the bigger picture is evolving of a falling AUD."

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