AUD/USD fell to a 2-year low amid burgeoning concerns over slower global economic growth, and the pair is vulnerable to a much deeper decline, if a key impediment gives way.
The Australian dollar fell broadly Friday despite China's June Caixin manufacturing PMI expanding at its fastest pace in 13 months nZUN0054F6.
Investors remain concerned major central banks, such as the ECB and Fed, may be over-reacting to rising inflation which could severely hinder growth prospects.
With this, a flight to safety helped drive the Australian dollar down, while the U.S. dollar and yen both rallied.
Emerging market and high beta currencies took significant hits versus the greenback and USD/CNH rallied back above 6.7100.
Global bond yields US10YT=RR, AU3YT=RR are sliding, which is reinforcing the preference for safe assets.
AUD/USD fell below 0.6765 and has only managed a meager bounce.
In fact, the pair now threatens to break the 50% Fibo of the March 2020-February 2021 0.5510-0.8007 rally.
Daily and monthly RSIs are falling, and have yet to reach oversold levels, which suggests downside momentum remains intact and a break of the Fibo is likely.
If this occurs, shorts can target the June 2020 low at 0.6648 and the 61.8% Fibo of 0.5510-0.8007.
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