The Australian dollar has been under pressure as its price has declined to the lowest level since 2016. The downward momentum continued in the Asian session today causing the pair to fall to a low of 0.7090.
There are two main reasons for the continued weakening of the Aussie. First, the price of major commodities, including iron ore have declined significantly in the recent past. As a leading exporter of these minerals, the country has been affected. However, the country is trying to shift from mining to manufacturing. Second, while the economy is doing well, it has recently been affected by a major drought. This drought led to low production in the country’s bread basket.
Third, the RBA has been weary about any rate increases. Other banks, including the big 4 have moved to hike mortgage rates in anticipation of a hike from the RBA. Therefore, the increasing of mortgage rates has led to the fear that the economy could slow. Finally, the global trade jitters have affected Australia. Most of its exports go to China, which is facing a full-blown trade war with the US.
The AUD/USD pair has reached 0.7114. The RSI is currently at 32, while the 14 and 21-day simple moving averages are higher than the price. Therefore, for long-term traders, this would be a good entry price for long positions. However, day traders and speculators can continue riding the bearish trend.