AUD/USD slips to fresh multi-month low

The AUD/USD pair ran through fresh offers during early European session and has now reversed all of its tepid recovery gains to hit a fresh six month low.

Currently trading around 0.7240 region, the pair came under renewed selling pressure after the US-based ratings agency, Fitch ratings, published a report on the Australian budget deficit forecasts. The rating agency expects the economic outlook to weaken and country's public debt ratios are likely to peak later - and at a higher level - than previously expected by the government, albeit expects the government to reduce its deficit but a slower rate than official forecasts. 

Earlier on Tuesday, the pair shrugged-off dovish RBA meeting minutes and staged a minor recovery amid broad based greenback retracement. The recovery, however, turned short-lived as the US Dollar regained traction and bounced back towards its 14-year peak touched in the aftermath of hawkish Fed statement. 

In absence of any major economic releases on Tuesday, the broader sentiment surrounding the greenback would continue to be key driver for the pair's next leg of move from the lowest level since early June. 

Technical levels to watch

A follow through selling pressure below 0.7225 horizontal support is likely to accelerate the slide towards 0.7200 handle before the pair eventually heads towards testing 0.7150 strong support. On the upside, 0.7280 level now becomes immediate hurdle above which the pair seems to move back above 0.7300 handle and head towards 0.7330 resistance area.