AUD/USD plunges to fresh six month lows

The AUD/USD pair failed to build on to its early recovery move beyond 0.7300 handle and has now plunged to fresh six month lows.

Currently trading around 0.7260 region, the pair maintained its offered tone for the fourth consecutive session as increasing bets of further Fed rate-hike action in 2017 continues to weigh on higher-yielding currencies - like the Aussie. Adding to this, weaker sentiment surrounding base metals, especially Copper, is further denting demand for commodity-linked currencies and responsible for fading the initial optimism led by Australian Government's Mid-year Economic and Fiscal Outlook (MYEFO) and narrowing budget deficits. 

Moving ahead, the broader market risk sentiment surrounding commodity prices and the US Dollar would remain key determinants of the pair's movement on Monday, in absence of any major market moving releases. 

Technical levels to watch

A follow through selling pressure is likely to drag the pair towards 0.7225 horizontal support below which the pair is likely to break through 0.7200 handle and head towards testing 0.7150 strong horizontal support. On the upside, any recovery might now confront resistance near 0.7280 level, which if cleared could lift the pair back towards 0.7300 handle. A convincing move above 0.7300 resistance, leading to a subsequent strength above session peak resistance near 0.7313 level, is likely to trigger a near-term short-covering rally towards 0.7375-80 horizontal resistance.