AUD/USD analysis: break below 0.7000 needed to confirm further declines

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7053

Chinese Services PMI for September expected at 51.5.
Persistent weakness in equities weighed the Aussie lower.

The Australian dollar fell to its lowest in over two years against the greenback this past week, hitting 0.7042 late Thursday, and unable to recover Friday, despite lessening demand for the American currency. The decline was driven by the collapse of worldwide equities and dollar prevalent strength, both a consequence of Fed's Powell comments about the possibility of more rate hikes coming. This last highlights the differences between both central banks, as the RBA has kept the cash rate at record lows for over two years and will maintain them there in the foreseeable future. Australia will open the macroeconomic calendar releasing the ANZ Job Advertisements report for September, hardly a market mover, while China will release the Caixin China Services PMI for September, seen at 51.5, matching the previous reading. This last has more chances of moving the Aussie at the beginning of the week.

The AUD/USD pair is oversold according to the daily chart, but there are no technical signs of a possible change in the dominant bearish trend, as the price has settled far below strongly bearish moving averages, while the Momentum indicator heads south almost vertically and the RSI hovers around 29. Shorter term, and according to the 4 hours chart, technical readings also favor a downward extension, as the pair settled below a strongly bearish 20 SMA, as technical indicators hold directionless within extreme oversold territory. As long as the pair holds below the 0.7100 region, the risk of a steeper decline remains high.

Support levels: 0.7040 0.7000 0.6965

Resistance levels: 0.0.7070 0.7105 0.7150

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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