The Australian dollar is under extreme pressure as it plumbs fresh 2022 lows.
The weakness is likely to persist, as the correction in global equity markets morphs into a bear market.
A bear market is defined by a fall of 20% or more from the high.
The S&P 500 is currently down 17.5% from the Jan 4 high, while the Nasdaq is already in bear market territory, having fallen some 27% in that time nL2N2X12IW.
The AUD was the best-performing currency at the start of both the inflation cycle and Ukraine war. Investors bought it against the EUR and JPY, as rising energy costs were seen as damaging the euro zone and Japanese economies, while higher commodity prices helped boost Australian exports.
EUR/AUD fell nearly 12% between early February and early April, as investors sought to hedge against rising inflation.
The cross has since risen around 6.5%, as fears of falling global growth drive demand for safe havens. Concern over the trajectory of China's economy has pushed metal prices lower, with London copper down over 15.5% from the highs nL2N2X10LI.
The AUD/USD has fallen over 9.5% to below its Jan 28 trend low at 0.6967 and downward momentum is increasing.
The next decent technical support is at the 50% retracement of the pandemic low-high at 0.6758.
The AUD/USD appears poised to at least test that support while the deleveraging of long-risk positions continues.
For more click on FXBUZ