The Australian dollar dipped below the 90-cent handle this week for the first time since March, and some analysts say it could finally be on its way to 80 cents.
"The momentum remains firmly to the downside," said Stan Shamu, market strategist at IG. "I wouldn't be surprised to see selling pressure remain. Once the gap from [Monday's] open is filled, perhaps sellers will return with greater conviction."
A confluence of weak Chinese industrial production figures, strong Australian jobs data and expectations for a U.S. interest rate hike in the near future has weighed on the Australian dollar, pushing it 4 percent lower against the greenback since September 5.
80 finally in sight?
The Australian dollar's strength has surprised investors. Despite ongoing economic headwinds including the end of Australia's mining boom, slowing growth in its largest trading partner China, weak commodity prices and bruised consumer and business sentiment following the government's harshest budget in two decades in May, it was stubbornly strong in the first half of the year.
A number of analysts have long been calling for the Aussie to fall as low as 80 cents - a level it hasn't seen since 2009 - as economic fundamentals come back into play, and the central bank continues to talk the currency lower. Over the past year, Governor Glenn Stevens repeatedly voiced his opinion that he would like to see the Aussie at 85 cents against the U.S. dollar.
"After being wrong on the Aussie dollar all year (I expected it to fall, but it went up), it's now going in the right direction again," said Shane Oliver, head of investment strategy and AMP Capital. "Thanks to a combination of a resurgent U.S. dollar as the [Federal Reserve] edges closer to an eventual rate hike and continuing weakness in commodity prices as highlighted by the plunging iron ore price."
"My view remains that it's on its way ultimately to around $0.80 or even a bit below, which is a level that would neutralize the relatively high cost and price base in Australia compared to the U.S.," added Oliver.
In March, analysts at Goldman Sachs forecast a slump to 80 cents by March 2015, underpinned by expectations that headwinds were intensifying, the country's terms of trade would continue to decline and capital flows were becoming less positive, as well as geopolitical risks and tightening financial conditions in China.