AUD/USD turns lower for fourth straight session, hangs near weekly lows ahead of FOMC

Haresh Menghani FXStreet

• US-China trade tensions/resurgent USD demand prompts some fresh selling.
• Positive copper prices do little to support Aussie and stall the ongoing slide.
• Focus remains on the latest FOMC decision and monetary policy outlook.

The AUD/USD pair extended its retracement slide from weekly tops and has now drifted into negative territory for the fourth straight session.

The pair struggled to build on its early goodish uptick to an intraday high level of 0.7283 and remained capped amid the recent escalation of the US-China trade tensions, which has been one of the key factors weighing on the China-proxy Australian Dollar over the past few months.

The latest leg of slide over the past hour or so could also be attributed to a sudden pickup in the US Dollar demand. Despite a weaker tone surrounding the US Treasury bond yields, traders seemed inclined to unwinding bearish USD bets ahead of today's key event risk and turned out to be one of the key factors exerting some fresh downward pressure.

Meanwhile, the prevalent positive trading sentiment around copper prices, which tends to underpin demand for the commodity-linked Australian Dollar, did little to lend any support and stall the pair's slide to levels below mid-0.7200s, back closer to weekly lows set in the previous session.

Market participants now look forward to the latest FOMC monetary policy update, where clues over the central bank's pace of rate increases beyond September will help investors determine the pair's next leg of directional move.

Technical levels to watch

A follow-through selling has the potential to continue dragging the pair further towards the 0.7210-0.7200 support area, below which the fall could further get extended towards mid-0.7100s. On the upside, the 0.7280-85 region, closely followed by the 0.7300 handle (50-DMA) might continue to act as an immediate hurdle, which if cleared might trigger a short-covering bounce towards 0.7360-65 supply zone en-route 100-day SMA hurdle near the 0.7390 region.

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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