AUD/USD flirting with 2-week lows near 0.7100 ahead of Powell

The Australian dollar printed fresh two-week lows 0.7100 against the USD in early Asian trading this Thursday, as overall strength of the US dollar and RBA Governor Lowe’s statements continue to disappoint the bulls. Next in the traders’ radar will be Fed Chairman Jerome Powell’s speech.

On Wednesday, the AUD/USD pair lost ground after the Reserve Bank of Australia (RBA) Governor Philip Lowe appeared for a speech at the National Press Club in Sydney. Lowe examined increased downside risks to the economy and brought rate cuts back on the table.

Analysts at the Macquarie Bank noted “Lowe explicitly shifted to a neutral bias … brings the Bank's thinking in line with our own central scenario for the cash rate outlook (i.e. no change by end 2020 at least).”

The downside pressure increased after the US dollar picked-up strength cross the board following the US President Trump’s State of the Union (SOTU) speech. Upbeat US monthly trade balance figures further added to the buoyant tone around the buck.

Trump sounded optimistic about the US and China trade deal during his SOTU speech whereas the December month US trade balance rose past -54.0B market consensus to -49.3B.

Looking forward, the Federal Reserve Chairman Jerome Powell’s speech at a virtual town hall meeting for teachers can offer fresh impulse to the pair traders. Investors are looking for clues to confirm whether the Fed still favors the “patience” stance as far as rate hike is concerned or not.

AUD/USD Technical Analysis

Break of short-term ascending supportline signals the AUD/USD pair’s weakness that can fetch it to 0.7070 support level. If the pair refrains to respect the 0.7070 rest-point, the 0.7015 and the 0.6980 may gain sellers’ attention.

On the upside, 0.7160 acts as immediate resistance for the pair before highlighting the 0.7200 level. Should prices rally beyond 0.7200, the 0.7260 and the recent high around 0.7295 can be targeted by the bulls.