The Australian dollar was the worst-performing major currency over the past day. It fell 114 pips to 0.8788.
The Aussie dollar had touched above 94 cents in mid-November but soon began to struggle and has now fallen more than 400 pips in the past week.
The long-term technical picture now looks bearish.
The uptrend has been broken and how the 100-day moving average (red) has been breached.
The recent declines in AUD come after the Reserve Bank of Australia said it could introduce a pause to its interest rate hiking cycle. This shook out some of the carry trade. At the same time, there has been a rally in the U.S. dollar based on short-covering and improved expectations for rate hikes in 2010.
The technical picture for AUD/USD looks perilsome at the moment. Some oscilators are showing that the pair is oversold but that’s to be expected in this sort of environment.
The initial target of the breakdown is the September low of 0.8568.
Looking at this four-hour chart, you can certainly make a case for extended declines. The measured target of the break below support is 0.8206 which falls roughly in line with the 200 day moving average of 0.8260.