Vulnerable AUD / USD near multi-week lows amid subdued RBA expectations

• AUD / USD witnessed strong selling for the fourth consecutive session on Tuesday.
• The RBA’s subdued expectations turned out to be a key factor weighing heavily on the Australian.
• The intraday fall did not get respite from risk appetite, the weakness of the dollar.

The pair AUD/USD It maintained its offered tone during the first North American session and fell to fresh multi-week lows around the 0.7020 region in the last hour.

The pair extended its recent strong pullback from the 0.7240-45 region and witnessed some subsequent selling for the fourth straight session. The drop also marked the sixth day of a negative move in the previous seven and was sponsored by increased bets for further relaxation by the Reserve Bank of Australia (RBA).

Market expectations that the Australian central bank will cut interest rates were bolstered by comments Thursday from RBA Deputy Governor Chris Kent and minutes from the October meeting. The RBA’s subdued expectations turned out to be one of the key factors that took its toll on the Australian dollar and put heavy pressure on the AUD / USD pair.

Meanwhile, the ongoing downward trajectory to the lowest level since September 25 did not appear to be affected by the prevailing selling bias around the US dollar. Uncertainty about the US fiscal stimulus measures, coupled with market optimism, undermined the dollar, although it did not provide any support to the AUD / USD pair.

On the economic data front, the disappointing release of the US Housing Initiative was largely offset by slightly better-than-expected building permits. The data did little to sway the AUD / USD pair or provide significant momentum as the focus remains on developments surrounding the US fiscal stimulus and the coronavirus saga.

The AUD / USD pair has now traded well within the September monthly swing lows support, around the key psychological mark of 0.7000. Some subsequent selling will be seen as a new trigger for bearish traders and will pave the way for a further short-term depreciation move. The downtrend could drag the pair to test levels below 0.6900.

Technical levels