In the last week the AUDUSD has slowly but surely eased lower from the key 0.7150 level after meeting resistance there for several days. In leading up to the selling pressure at 0.7150, the AUDUSD had done well to rally higher from its 2½ year low around 0.7040 only a couple of weeks ago. This area provided some much-needed support and the AUDUSD will be looking for similar support now. It was only several weeks ago that the AUDUSD reached a four-week high above 0.73 before the recent declines. The 0.7150 level has played a role in the last month or so as it has bounced off this levels several times, however, it has now reversed roles. Up until this recent drop the AUDUSD had been quite content to trade around 0.74 and it previously made a few attempts to break through the resistance at 0.75, however, all of these were thwarted.
During this period, the significant level at 0.75 loomed like a dark cloud. This same level has previously propped up the currency pair before being broken strongly mid-June. Throughout June the AUDUSD has dropped very sharply from one month high above the key 0.7650 level down to a new 12 month low around 0.7310. In a couple of weeks prior to this sharp drop, the AUDUSD has enjoyed some much-needed support from the key 0.75 level. It was only in early May that the AUDUSD was trading below this level and looking poised to continue much lower, so it did well to rally higher and get back above the 0.75 level.
Throughout the last couple of years the AUDUSD has traded within reasonably tight ranges of up to six cents, and in the last nine months or so we have seen it push higher to its highest levels in more than two years above 80 US cents. The 80 cents level, however, has provided a significant obstacle to the AUDUSD as it has met resistance there since the middle of 2017. Repeated attempts to push through the key 80 cents level were short-lived and the AUDUSD quickly sold off moving it lower down to its current levels.
The Reserve Bank of Australia (RBA) is keeping a close eye on the Australian housing market and widespread price declines. The RBA deputy governor Guy Debelle says the central bank is giving the housing market "pretty close attention" but it remains unclear whether the slump in prices will drag on the wider economy. Concerns are growing that the housing price decline will drag on growth after a year-long slide in house prices in the biggest cities, however, Dr Debelle said the trend needed to be put into perspective. Dr Debelle highlighted that house prices are not falling everywhere in Australia, as lending to owner-occupiers has remained solid. At Citi's investment conference in Sydney, Dr Debelle said, “All of that means that yes, it’s something that we’re paying pretty close attention to. How much of a drag it may constitute, is just not clear.”In highlighting that price declines are not occurring everywhere, Dr Debelle said, “Not all of the country lives in Sydney. They’ve come down in Sydney by about 6 or 7 per cent from their peak, having gone up, sort of, 50 per cent in a few years.”