Australian dollar
Australian dollar

The Aussie dollar has broken below a key support line thanks to more downside data in the form of the Westpac consumer confidence index - increasing pressure on the Reserve Bank of Australia to sound more dovish in the upcoming policy review.

AUD/USD dropped to 0.9113, its lowest since 24 March, from the previous close of 0.9203.

The Aussie dollar was down 2.8% so far this week at Wednesday's low, making the currency the worst performer among majors.

The Westpac consumer confidence index dropped to 94 for September from 98.5 in August, data showed on Wednesday.

Home loans disbursals grew 0.3% in July, more than the 0.1% growth in June, but trailing the market consensus of 1.0% growth, Australian Bureau of Statistics said on Tuesday.

Meanwhile, the NAB business confidence index fell to 8 for August from 10 in the previous month, according to a press release from the bank. The Business conditions index dropped to 4 from 8.

The RBA had left the main policy rate unchanged at 2.5% at the review on 2 September. The central bank has been concerned about the strength of the Aussie dollar and therefore, the recent weakness in the currency may ease the worry.

The GDP data for second quarter too surprised on the lower side. Australian economic growth slowed to 3.1% in Q2 from 3.5% in Q1, on a year-on-year basis, data on 3 September showed.

The market is now waiting for the August unemployment data due on 11 September. A disappointment in that will increase expectations of fresh dovish hints from the central bank.

AUD/USD Technical Analysis

With the fall on Wednesday, AUD/USD has broken below the 38.2% Fibonacci retracement of the January-June rally. The next level on the downside is the 50% mark of 0.9090 ahead of 0.8990, the 61.8% mark.

Further south, the level to watch out for is 0.8890 ahead of a retest of the January low of 0.8660.

On the higher side, 0.9200 has become a resistance line, slightly above the 38.2% Fibonacci. Further up, the pair will target 0.9300, the 23.6% level and then 0.9400 ahead of retesting the June peak of 0.9507.

AUD/USD Daily IB Times UK/FXStreet