AUDUSD Plunges to the Lowest Level Since 2008 After CNY Devaluation

FXOpen

Key Takeaways:

  • AUDUSD hits multi-year low level amid devaluation of Chinese Yuan
  • Bears look in complete control
  • A bullish pin bar or engulfing candle will signal a bullish reversal

The Aussie dollar (AUD) plunged to the lowest level since 2008 against the US Dollar (USD) on Wednesday, dragging the AUDUSD pair to less than even 0.7250 after China’s central bank devaluated the Yuan.

The technical bias remains extremely bearish due to a lower low and lowers high in the ongoing wave.

The bearish potential has increased exponentially. Short term, the 1-hour chart shows that the 20 SMA has accelerated its decline and stands now around 0.7320, while the RSI indicator holds near oversold levels and the Momentum indicator hovers below its 100 level after correcting oversold readings.

In the 4 hours chart, the technical indicators head sharply lower, despite being near oversold levels, whilst the 20 SMA gains a bearish slope, well above the current price and supporting a new leg lower, particularly on a break below 0.7260, the immediate support.

China’s Central Bank devaluated the Yuan by 1.9%, the most on record, triggering a sell-off in commodity currencies that are still on.

The US data was also tepid, as worker productivity output increased at a 1.3% annualized rate from April through June, following a 1.1% decline in the first quarter of the year.

Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term if we get a bullish pin bar or bullish engulfing candle on a daily chart.

Trade global forex with the Innovative Broker of 2022*. Choose from 50+ forex markets 24/5. Open your FXOpen account now or learn more about trading forex with FXOpen.

* FXOpen International, Innovative Broker of 2022, according to the IAFT

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Forex Analysis

Market Analysis: The American Currency Resumes Growth EUR/USD Analysis: The Rate Updates Its Multi-month Low Market Analysis: Dollar Falls After Inflation Data Release Euro Analysis: ECB Cautions Against Rate Cuts Amid Inflation Battle Market Analysis: GBP/USD Struggles While EUR/GBP Eyes Increase

Latest articles

Shares

Top 5 Stocks to Watch in October: Bank on the Backfoot, No Thirst for Coca-Cola, Tech Giant Takes Dip and Electric Vehicle Volatility

October is here, and as the markets enter a new month, we take a closer look at five stocks that could be of significant interest to investors. 1) Bank of AmericaBank of America stock has taken a dive over the

Forex Analysis

Market Analysis: The American Currency Resumes Growth

The beginning of October turned out to be favourable for continued growth in the US dollar. From the data published yesterday, it follows that in September, the US manufacturing business activity index (PMI) rose to 49.0 against the forecast

Forex Analysis

EUR/USD Analysis: The Rate Updates Its Multi-month Low

Never in its history has the euro fallen for 11 weeks in a row against the dollar, but it happened. The minimum has been set for 2023. The reason seems to be that in an environment where central banks are

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.