AUD/USD drops further towards 0.7800 on resurgent USD demand

The AUD/USD pair resumed its bearish momentum in Asia this Friday, reversing a temporary bounce seen a day before, as the USD bulls regained control ahead of the Fed’s bi-annual monetary policy report.

AUD/USD back below 200-DMA at 0.7825

The US dollar regained poise against its main competitors, following yesterday’s downward correction from eight-day tops of 90.17, puncturing the relief rally in the Aussie. The greenback tracks the fresh buying seen in Treasury yields, as investors gear up for a hawkish tone to be delivered by the Fed’s monetary policy report due later on Friday, especially after this week’s FOMC January meeting minutes showed that the Committee backed the case for further rate increases this year.

The spot breached the 200-DMA support once again and now looks to test the next key support placed at 0.7770, the confluence zone of 100-DMA and Feb 14^th low, on a breach of the 0.78 handle.

Meanwhile, the renewed weakness seen around oil prices combined with falling copper and gold futures on Comex, collaborate to the latest leg down in the resource-linked Aussie, as markets ignore the upbeat tone prevalent around the Asian equity markets.

Looking ahead, all eyes remain on the FOMC member Dudley’s speech and the Fed report for fresh direction on the prices. In the meantime, the USD dynamics and risk trends will continue to have a significant influence on the pair.

AUD/USD levels to watch

According to FXStreet’s Chief Analyst Valeria Bednarik, “in the 4 hours chart, the pair was unable to surpass a bearish 20 SMA, currently, the immediate resistance around 0.7860, while technical indicators recovered from oversold levels, but pared their advances below their mid-lines. The immediate support, on the other hand, is the 0.7820 level, where the pair has the 50% retracement of the December/January rally. Support levels: 0.7820 0.7775 0.7730. Resistance levels: 0.7850 0.7890 0.7930.”