AUD/USD Price Analysis: Stays in the red near 0.7075-80 but holds above 23.6% Fibo.
|- AUD/USD witnessed some selling on Tuesday and eroded a part of the previous day’s strong gains.
- Recession fears weighed on investors’ sentiment and drove flows away from risk-sensitive aussie.
- Sustained weakness below mid-0.7000s is needed to confirm that spot prices have topped out.
The AUD/USD pair came under some selling pressure on Tuesday and moved further away from over a two-week high, around the 0.7125 region touched the previous day. The pair remained depressed through the early North American session and was last seen trading around the 0.7075-0.7080 region, just a few pips above the daily low.
The worsening global economic outlook continued weighing on investors' sentiment and triggered a fresh wave of the risk-aversion trade. This was evident from a generally weaker tone around the equity markets, which, in turn, undermined the perceived riskier aussie, though modest US dollar weakness helped limit deeper losses.
From a technical perspective, the AUD/USD pair, so far, has managed to hold its neck above the 23.6% Fibonacci retracement of the 0.6829-0.7128 recent recovery move. This is closely followed by a confluence comprising an upward sloping trend-line extending from the YTD low touched earlier this month and 100-hour SMA.
The technical set-up warrants some caution before confirming that the recent positive move witnessed over the past two weeks or so has run out of steam and before placing bearish bets. Moreover, neutral oscillators on hourly/daily charts haven't been supportive of any firm near-term direction, warranting caution for aggressive traders.
Hence, sustained weakness below the aforementioned confluence, around mid-0.7000s, is needed to support prospects for any further losses. The AUD/USD pair might then accelerate the slide towards the 38.2% Fibo. level, around the 0.7015 region, en-route the 0.7000 psychological mark and the 50% Fibo. level support near the 0.6980 area.
On the flip side, the 0.7100 round-figure mark now seems to act as an immediate hurdle ahead of the overnight swing high, around the 0.7125 region. Some follow-through buying would be seen as a fresh trigger for bulls and pave the way for a move towards the 0.7200 round figure, with some intermediate resistance near the 0.7170 region.
AUD/USD 1-hour chart
Key levels to watch
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