AUD USD bounces after sell off

AUD/USD (daily chart shown below) has bounced on Wednesday after a substantial sell-off a day earlier that brought the currency pair down to a new multi-year low of 0.7625.

This latest sell-off was prompted by a surprise interest rate cut by the Reserve Bank of Australia from 2.5% down to 2.25%, with discussion of possible further rate cuts in the future.

AUD/USD had already been entrenched for the past five months within a strong downtrend that saw price action drop from around the 0.9400 level down to the new five-year low of 0.7625, before bouncing back above 0.7700.

After the breakdown below 0.8000, the 0.7700 level had been the next major downside support target. Now that this target level has been hit, a bearish trend continuation has been confirmed.

Despite the current bounce from its lows, AUD/USD continues to be under significant selling pressure. Any drop back down below 0.7700 support could begin to target the 0.7500 psychological level, followed to the downside by the 0.7300 support level.

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