The Australian dollar has pared most of the RBA minutes-related losses with the market now awaits a likely upbeat inflation data release, but charts show that the AUD/USD pair is headed for the 0.7000 mark, a fresh multi-year low for the Aussie currency.
The Australian dollar traded lower across the board on Tuesday morning in Asia after the minutes of Reserve Bank of Australia's recent meeting showed that policymakers want the currency still weaker, but then rebounded as by European markets opened.
AUD/USD slipped to 0.7341 from the previous close of 0.7371 before rebounding to 0.7372 by 9am GMT. The pair failed to break below Monday's low of 0.7327, which was seen for the first time in six years.
Analysts forecast that Australian consumer price inflation may have accelerated to 1.7% from a year earlier in the second quarter compared to 1.3% registered in the first quarter. Quarter-on-quarter, the rate may have increased to 0.8% from 0.2%.
The data will be out on Wednesday morning in Asia.
Technically, the AUD/USD pair has once again broken a channel support, triggering an important bearish signal. This is the third such break after the downside move started off the 2011 peak.
The most recent one was in December last year, when the Aussie dollar lost around 400 pips over a week, taking it near the 0.8000 mark. The latest has broken the 0.7400 mark, opening doors to the 0.7000 psychological level.
As long as resistance at 0.7530 holds, near term chances of the pair hitting new lows are greater. Further higher, 0.8100 will likely be a more important resistance in a broader picture compared to 0.8000.
Australia is highly sensitive to global commodity prices, which have remained under renewed downward pressure, and the currency has its risks skewed more to the downside, analysts said.
"Commodity prices had fallen further and the Australian dollar had depreciated over the past month. Although the exchange rate against the US dollar was close to levels last seen in 2009, the decline in the Australian dollar had been more modest in terms of a basket of currencies," the RBA minutes published on Tuesday showed.
"Members noted that the exchange rate had thus far offered less assistance than would normally be expected in achieving balanced growth in the economy and that further depreciation seemed both likely and necessary."