AUD/USD Monthly
Aussie dollar has next important support at 0.70. Rebound to parity seems a big dream. IBTimes UK/FXStreet

The big slide in commodity prices and slowdown in China has weakened the Australian dollar more than 10% against the US currency in 2014 and the outlook for next year is also dim.

The AUD/USD pair has been trending downward after losing momentum from an all-time high of 1.1082 touched in July 2011, but by June last year, the southward channel had shrunk to a narrower one with lower upside barrier.

Now the significance of the 5.6% fall in December is that with that slide, the downside barrier of the channel has been broken lower.

The 0.80 medium term support seems a strong one but if the pressures seen in the second half of 2014 continue, a bounce off that support may not materialise, and instead, head through 0.75 for another round number support at 0.70.

In case of a bounce off the December lows and if the downward channel since mid-2013 is what shows up again, then the pair will face strong resistance near the 0.90 region.

Only a break above 0.94 will weaken fears of 0.70 effectively and the big 0.985 has to be broken to confirm the reversal of this year's trend.

Then AUD-USD parity will not be a tough target and even new highs beyond the 2011 peak.

But parity is 25% above current levels and a rise of that margin seems fundamentally unlikely next year with the US Federal Reserve preparing for rate hikes and Australia's economic outlook remaining bleak.

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