AUD/USD slammed to fresh three-week lows

After spending majority of the European trading session within a narrow trading range the AUD/USD pair finally broke on the downside and has now dropped to fresh three-week low.

Currently trading around 0.7330-25 region, the pair remained under selling pressure for the third consecutive session as rising bets of faster Fed rate-tightening cycle in 2017 is denting demand for higher-yielding currencies - like the Aussie. Adding to this, the prevalent weaker sentiment in commodity markets, especially Copper, is weighing on the resource-linked currency, the Australian Dollar. 

On economic data front, US housing market data showed housing starts dropped sharply in November to an annualized pace of 1.09 million, sharply lower from 1.34 million reported in October. Meanwhile, building permits also fell short of expectations and came-in to show builders applied for 1.2 million (annualized) permits in November as compared to October's 1.26 million units. 

Disappointing US economic data did little to distort the US Dollar's well-established bullish trend and provided little respite for the AUD/USD bulls but might limit further downslide for the time being. 

All eyes now shift to next week's big event risk for the major, Australia's Mid-Year Economic and Fiscal Outlook (MYEFO), scheduled for release during Asian session on Tuesday and would be accompanied by minutes from RBA's latest monetary policy meeting.

Technical levels to watch

Immediate support is pegged at 0.7310 (Nov. 21 low), which if broken is likely to accelerate the slide and drag the pair below 0.7300 handle towards testing its next support near 0.7265-60 region. On the upside, immediate resistance is seen at 0.7350 level above which the pair is likely to dart towards 0.7385 horizontal resistance.