Earlier today, the Australian Bureau of Statistics (ABS) released the quarterly Consumer Price Index data in Australia for the three months to September. According to the findings of the report, the country's inflation rate surged to 1.6 per cent in Q3.
The recorded performance of the Australian economy surpassed the preliminary market expectations, which were projecting a 1.5 per cent jump. The final performance marks a considerable rebound from the 1.9 per cent contraction that was observed in the second quarter.
The sharp rebound is not that surprising given that it encapsulates the sudden restart of the general economic activity in Australia in the wake of the initial coronavirus crash.
Despite these welcoming news that is directly affecting Australia's overall price stability, the Aussie tanked in the aftermath of ABS's publication. As can be seen on the 4H chart below, the AUDUSD is being driven lower by considerable bearish pressure.
The Australian dollar is sinking as the recent escalation of the coronavirus crisis poses a renewed threat for the global supply chains, while the greenback is advancing following the recently recorded robust performance of the American economy.
The downwards-sloping trend line (in red) elucidates the strength of the above-mentioned selling pressure, while the recent bearish crossover on the MACD indicator confirms the rising bearish momentum.
At present, the price action is attempting to break down below the minor support level at 0.71000, which has served as both a prominent support and resistance level in the past.
Should this decisive breakdown be fully established, the next target level for the currently evolving downtrend would be the psychologically significant support level at 0.70000.
The latter has already served as a significant turning point on two separate occasions in the past, so the current downtrend could find it difficult to break down below it even on the third attempt.