AUD/USD sticks to weaker Aussie CPI-led heavy intraday losses to multi-week lows

   •  Softer Aussie CPI fuel speculations of an RBA rate cut and prompts aggressive selling.
   •  The USD held steady near 22-month tops and does little to ease the bearish pressure.
   •  Technical selling below previous monthly lows accelerates the downward trajectory.

The AUD/USD pair maintained its heavily offered tone through the mid-European session and is currently placed at near seven-week lows, around the 0.7030 region.

The pair extended last week's rejection slide from the very important 200-day SMA, levels just above the 0.7200 handle, and traded with a bearish bias for the fifth consecutive session. The bearish pressure aggravated after the headline Aussie CPI print missed consensus estimates and came in flat on a quarterly basis. 

Adding to this, RBA's trimmed mean CPI - excluding the most volatile 30% of items, eased to 0.3% during the first quarter of 2019 as against market expectation of a stable 0.4% q/q rise and fueled speculations that the RBA will be forced to cut interest rates by 25bps as early as in May.

The market reaction was evident from a sharp intraday slide in the Australian government bond yields, which weighed heavily on the domestic currency and took along some short-term trading stops placed near the previous monthly lows support around the 0.7050 region.

Meanwhile, the US Dollar held steady near 22-month tops, touched in reaction to Tuesday's upbeat new home sales data, and further collaborated to the pair's slump to the lowest level since March 11, with bulls failing to get any respite from the prevalent bullish trading sentiment around commodity space. 

It would now be interesting to see if the pair is able to find any buying interest at lower levels, around the key 0.70 psychological mark, or the latest leg of downfall marks a fresh bearish breakdown, setting the stage for an extension of the downward trajectory in the near-term.

Technical levels to watch