Things are looking not too rosy for the AUDUSD as it just broke its long term uptrend line which began back in March 2009. Presently, the pair is flirting with the 0.9000 psychological support. If the pair manages to fall below the mentioned level, it could drop all the way down to the 0.8600 handle. Moreover, with conditions being overbought as indicated by the stochastics, the pair still has a lot of room to move lower.
Fundamentally, the recent move of the Reserve Bank of Australia to hike its interest rate to 4.50% from 4.25% was not enough to give the Aussie some lift. Rather, the ongoing concerns about the euro zone’s debt situation have kept a lot of traders from buying up the higher yielding currencies like the AUD. If the EU nations do not solve their present predicament as soon as possible, risk aversion could be the overall theme of the market. And as we all know, such would be bearish for most of the anti-dollar currencies.