December retail sales fell for a third time despite expectations for a modest 0.3% growth, bringing us 3 consecutive month of declines – the longest streak in 13 years. AUD/USD understandably fell, but the degree which price collapsed was highly unexpected. Bear in mind today is a good day for equities – Nikkei 225 grew a massive 3.77%, HSI at +0.47% while even Australian equities benchmark ASX added +0.78% despite the disappointing news. Certainly we are looking at yesterday dovish RBA’s minutes taking a toll on AUD/USD, and traders are simply finding any reasons they can find to short Aussie.
Hourly Chart has broken the 1.038 shorter-term support and price didn’t look back. There was zero attempt from bulls to re-test the support, highlighting the bearish intensity we’re facing currently. The bearish momentum is also underlined by Stochastic forming a bearish cross between Stoch/Signal line despite entering the Oversold region shortly before.
Daily chart highlights another significant support along 1.035. Current price is looking to test 1.03, with increasing bearish momentum demonstrated by price moving lower away from the declining trendline. A break of 1.03 opens up 1.025 as interim support and 1.015 as the ultimate bear target before an opening of 0.97 possibility.
Moving forward, tomorrow’s Unemployment Rate and Employment Change may provide yet another excuse for traders to sell into. A weak print will simply keep bearish momentum going, while a strong print may temporarily push prices higher, potentially being kept below the daily declining trendline and/or 1.035 resistance, followed by bear traders taking opportunities of the higher prices to initiate new short positions.
Employment Change: Expected +12K, Previous -5.5K
Unemployment Rate: Expected 5.5%, Previous 5.4%
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