The Aussie dollar fell to new two-month low at 0.7028 on Wednesday, pressured by disappointing economic growth figures of Q4 2018.
Annual Australian GDP rose 2.3% in Q4 (at the slowest pace since mid-2017) falling below expectation for 2.5% rise and 2.8% in the previous quarter.
Further slowdown of the economy raises expectations for RBA to start cutting interest rates and stimulate the economy, after the central bank held optimistic tone following rate decision meeting on Tuesday.
Fresh bearish acceleration of AUDUSD pair eventually broke strong supports at 0.7070/54 (Fibo 38.2% of 0.6706/0.7295 / 12 Feb trough) and generated strong bearish signal that requires confirmation on daily close below these points.
Completion of Head & Shoulders pattern on daily chart (bears pressure the neckline at 0.7022) adds to negative outlook, along with growing bearish momentum and other daily indicators in negative setup, however, oversold stochastic warns that bears may enter consolidation before attempts through psychological 0.70 support (also 50% retracement of 0.6706/0.7295).
Broken previous key supports at 0.7054/70 are now acting as solid barriers which should ideally limit upticks and guard pivotal resistance at 0.7110 (converged 10/20SMA’s).
Res: 0.7054, 0.7070, 0.7092, 0.7110
Sup: 0.7022, 0.7000, 0.6931, 0.6900
