AUD/USD Sinks After Retail Sales Miss Badly

The Aussie dollar continues to be dumped after the big miss on Australian retail sales data. Sales dropped 0.2% in December versus expectations of a 0.1% climb, to make it a third consecutive monthly decline and capping the longest stretch of declines for 13 years. Yet, in true "New Normal" style, this somehow managed to spur major retail stocks down under - MYR, DJS & JBH - to healthy gains, perhaps on perverse logic that the RBA may move to cut rates even further.

On the AUD/USD hourly chart, a clear downtrend has been in place for over a couple of weeks now, and support is coming into severe question over the past few hours. Support levels at 1.0385 & 1.0350 have been promptly taken out, moving the Aussie dollar to the bottom of the channel. Bears may be looking to attack the price to below 1.0275 for further sustained falls.

The daily picture shows that the cyclical uptrends in place from June 2012 lows have been clearly violated, in addition to the key 23.8% retracement level of 1.0380 being lost. Currently, the 200DMA has been punctured, and the support from the down trend in place from late January this year is being tested. If price levels fall through, it would appear that next major support may come at the 38.2% level of 1.0230.

The weekly picture shows an interesting fan formation in which the Aussie dollar has sequentially dropped through multiple levels. It currently sits around where the 10WMA, 50WMA & 100WMA have all converged, with the bollinger bands also contracting. It would appear that this is set up for relatively significant directional move. A drop below the current uptrending support may open the door for a test of 0.9140, the 38.2% retracement of July 2011 lows.