AUD/USD slides further below mid-0.7100s amid a broad-based USD strength

AUD/USD came under renewed selling pressure on Monday amid a pickup in the USD demand.
The prevalent risk-on mood also did little to lend any support to the perceived riskier aussie.
The downside is likely to remain cushioned as the focus remains on the FOMC policy decision.

Haresh Menghani FXStreet

The AUD/USD pair extended its steady intraday descent through the early part of the European session and dropped to a fresh daily low, around the 0.7140-35 region in the last hour.

The pair struggled to capitalize on last week's strong recovery move from sub-0.7000 levels or the lowest level since November 2020 and met with a fresh supply on Monday. The US dollar was back in demand amid hawkish Fed expectations and was seen as a key factor that exerted some downward pressure on the AUD/USD pair.

Investors seem convinced that the Fed would tighten its monetary policy sooner rather than later to contain stubbornly high inflation. The market expectations were reaffirmed by Friday's data, which showed that the headline CPI accelerated to the highest level since 1982 and the core CPI recorded the sharpest rise since mid-1991.

In the meantime, the USD bulls seemed rather unaffected by a softer tone surrounding the US Treasury bond yields. Even the prevalent risk-on environment also did little to lend any support to the perceived riskier aussie. This, in turn, favours bearish traders and support prospects a further intraday downside for the AUD/USD pair.

That said, investors might prefer to wait on the sidelines ahead of the highly-anticipated FOMC monetary policy decision, scheduled to be announced on Wednesday. Given that the money markets have been pricing in the possibility for an eventual liftoff in May 2022, the outcome should provide a fresh directional impetus to the AUD/USD pair.

Even from a technical perspective, the two-way price move witnessed over the past four trading sessions points to indecision over the AUD/USD pair's near-term trajectory. This makes it prudent to wait for a strong follow-through selling before placing aggressive bearish bets amid absent relevant market moving economic releases from the US.

Technical levels to watch

AUD/USD

Overview
Today last price	0.7138
Today Daily Change	-0.0034
Today Daily Change %	-0.47
Today daily open	0.7172

Trends
Daily SMA20	0.7175
Daily SMA50	0.7315
Daily SMA100	0.7315
Daily SMA200	0.7484

Levels
Previous Daily High	0.7184
Previous Daily Low	0.7131
Previous Weekly High	0.7188
Previous Weekly Low	0.6995
Previous Monthly High	0.7537
Previous Monthly Low	0.7063
Daily Fibonacci 38.2%	0.7164
Daily Fibonacci 61.8%	0.7152
Daily Pivot Point S1	0.7141
Daily Pivot Point S2	0.711
Daily Pivot Point S3	0.7089
Daily Pivot Point R1	0.7194
Daily Pivot Point R2	0.7215
Daily Pivot Point R3	0.7246

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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