AUD/USD Price Analysis: Gets smashed towards 0.7050 after rejection at 200 DMA

AUD/USD sees a sharp sell-off on renewed China growth concerns.
US dollar gathers upside traction as risk-off remains at full steam.
Multiple rejection at 200 DMA spells trouble for the aussie ahead of RBA/ Fed minutes.

Dhwani Mehta FXStreet

AUD/USD is falling hard towards 0.7050, as the selling interest around the aussie dollar remains unabated amid resurfacing concerns over China’s economic recovery.

Disappointing Chinese acitivity numbers for July raised alarm that the post-pandemic economic recovery is weakness in the workd’s second-largest economy. This has rattled market sentiment while weighing heavily on the Chinese proxy, as well as, the higher-yielding AUD.

Additionally, tensions are building up between Washington and Beijing after a US delegation arrived in Taiwan, especially after the contentious visit by House Speaker Nancy Pelosi. The US-China geopolitical risks are also rendering AUD-negative. Commenting on a US congressional delegation’s visit to Taiwan, China Global Television Network (CGTN) expert Han Peng said, Beijing may tighten its military blockade of Taiwan and economic sanctions on the island.

The US dollar emerges the sole winner amid the risk-off scenarion, extending Friday’s rebound towards 106.00 against its major peers. Attention turns towards Tuesday’s RBA minutes and FOMC minutes due to be published on Wednesday for fresh trading opportunities in the pair.

From a short-term technical perspective, the daily structure appears interesting, as the price has run into the critical horizontal 200-Daily Moving Average (DMA) at 0.7121 for the third trading day in a row.

This has spelled trouble for AUD bulls, prompting a pullback towards the 0.7050 psychological support. The next key downside target aligns at 0.7000, the round figure.

Although bulls still remain hopeful as the 21 DMA has crossed the 100 DMA for the upside, flashing a bulish signal.

The 14-day Relative Strength Index (RSI) has turned south but remains well above the midline, suggesting that the sell-off could be seen as a good buying opportunity.

If bulls manage to defend 0.7050, then a rebound towards 0.7100 will be in the offing, The 200 DMA barrier will be back on buyers’ radars on a renewed upside.

AUD/USD: Daily chart

AUD/USD: Additional levels to consider

AUD/USD

Overview
Today last price	0.7069
Today Daily Change	-0.0052
Today Daily Change %	-0.73
Today daily open	0.7123

Trends
Daily SMA20	0.6967
Daily SMA50	0.694
Daily SMA100	0.7084
Daily SMA200	0.7152

Levels
Previous Daily High	0.7129
Previous Daily Low	0.7084
Previous Weekly High	0.7137
Previous Weekly Low	0.6898
Previous Monthly High	0.7033
Previous Monthly Low	0.668
Daily Fibonacci 38.2%	0.7112
Daily Fibonacci 61.8%	0.7101
Daily Pivot Point S1	0.7095
Daily Pivot Point S2	0.7066
Daily Pivot Point S3	0.7049
Daily Pivot Point R1	0.714
Daily Pivot Point R2	0.7157
Daily Pivot Point R3	0.7186

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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