AUD/USD: dropping like a stone within a handle of a 100% reversal

Currently, AUD/USD is trading at 0.7932, up 0.02% on the day, having posted a daily high at 0.7936 and low at 0.7928.

Forex today: dollar softer, pound firmer, yen floored

AUD/USD is on the floor and about to complete 100% of the rally from 0.7905 31st August on just another leg or two lower through critical support levels. So what is weighing on the Aussie, besides the Fed and dollar strength?

Firstly, RBA's Lowe was vocal over timings of a rate hike and that was taken 'dovishly'.0.7940 was under immediate pressure. In NY, there was a period of consolidation in early trade, buoyed by AUD/JPY demand post dovish BoJ. However, the downgrade of China by the S&P had the bears take back control with metals falling off a cliff - Iron ore subsequently fell 5%.

Analysts at Westpac offered their outlook for AUS/USD as follows:

"AUD/USD 1 day: 

Momentum is starting to turn negative, targeting the 0.7900 area during the day ahead as long as the USD preserves some of its recent gains.

AUD/USD 1-3 month:

If the RBA remains firmly on hold, as we expect, and the US dollar rises on tighter Fed policy, then AUD/USD could fall to 0.76 by year-end. (9 Aug)"

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the Momentum indicator heads sharply lower into a negative territory: "RSI indicator consolidates around 36, whilst the 20 SMA gains bearish strength far above the current level, all of which favors a new leg lower towards the mentioned support on a break below Thursday's low."