S&P Downgrades Australia’s Credit Rating Outlook

The recent downgrade in Australia's Credit Rating outlook has changed from stable to negative by S&P Global Ratings causing a major decline in the Aussie Dollar against its major rivals. According to S&P, there is one-third chance of lowering the rating further in the next two years unless necessary actions are being taken by the parliament to improve their budget position. Keeping the recent election event in mind the negative outlook clearly reflects the deficit in the present budget by the Australian government. Back in September 1986, Moody’s and S&P downgraded the Australian AAA rating to AA1  causing a major decline in the Aussie dollar.

According to the different economist, the Aussie dollar might face much worse economic side effect due to recent negative outlook in AAA rating which might surplus the effect of 1986. Over the last one year, the Aussie dollar was struggling to hold its strength which tends to be boosted by the chaotic election result regardless of the participant. Though the statement from Dr. Oliver created a light of hope in the mind of the investor but later on it was washed away with the statement which highlighted the impact of the negative outlook in the long run followed by the budget deficit projection of the upcoming new government.

Technical Outlook

• Key Resistance: 0.78343 (High of 21st April 2016)


• Initial resistance: 0.75700 (61.8% Fibonacci retracement level drawn from the high of 21st April 2016 to the low of 24th May 2016)


• Key support :0.72140 (61.8% Fibonacci retracement level drawn from the low of 15th January 2016  to the high of high of 21st April 2016)

The AUDUSD pair tends to complete its short-term correction in the daily time frame and currently facing the key resistance level at 0.75700 (61.8% Fibonacci retracement level). If the pair retreats from that level then the topping of the pair would be the key resistance level 0.78343 (High of 21ist April 2016).

On the contrary, a bullish break of the 0.75700 resistance level will challenge the key resistance  level at 0.78343. A clear bullish break of the high of 21st April will form the initial bottom of the pair at 0.68267 (Low of 15th January 2016  ).

We will look for selling opportunity near the 0.75700 resistance level with price action confirmation signal in the 61.8% Fibonacci level. The first initial downward momentum of the pair will target the minor support level at 0.73300. A clear decisive break of that level will bring the further downward movement of the pair targeting the major key support at 0.72140.

If the pair manages to break the key support level at 0.72140, the pair will exhibit a strong downward rally towards the low of 15th January 2016  (0.68267). A clear decisive break of that level will bring the strong bearish continuation in the pair in favor of the long-term bearish trend.