AUD/USD analysis: lack of buying interest skews the risk to the downside

AUD/USD Current price: 0.7217

• Westpac Consumer Sentiment marginally up in December, recovering September slump.
• Melbourne Institute Consumer Inflation Expectation for the next 12 months up next.

The Aussie advanced just modestly against its American rival, despite dollar's self-weakness and rising equities, triggered by relief headlines related to the US-China trade war. Furthermore, the AUD/USD pair was unable to react positively to Australian data, as the Melbourne Institute and Westpac Bank index of consumer sentiment advanced  0.1% in December, from November when it gained 2.8%, completely reversing the sharp drop suffered back in September. “The consumer mood continues to hold at cautiously optimistic levels,” said Westpac’s chief economist Bill Evans. Commodities traded with a soft tone throughout the day, but seems a poor excuse for Aussie's limited momentum. If the pair doesn't recover in the upcoming sessions above 0.7250, bulls will be further spooked, and a bearish breakout will be around the corner. This Thursday, the Melbourne Institute will release the Consumer Inflation Expectations for the next 12 months, previously at 2.5%.

 The AUD/USD pair remains unable to advance beyond its 200 SMA in the 4 hours chart, which maintains a mild bullish slope, with the pair also battling with the 23.6% retracement of its latest daily decline. In the same chart, the 20 SMA lacks directional strength a few pips below the current level, while the 100 SMA moves marginally lower now converging with the 38.2% retracement of the same slide at 0.7260. Technical indicators in the mentioned chart lack directional strength around their midlines, all of which indicates an absence of buying interest. The downward potential will increase on a break below 0.7170 a strong static support.

Support levels: 0.7200 0.7170 0.7140  

Resistance levels: 0.7255 0.7300 0.7340    

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