- AUDUSD fades the upside below the key Fibo 38.2% Fibo level.
- USD sell-off fails to impress amid covid lockdowns in Southern China.
- Daily RSI remains below 50.00, keeping the bearish bias intact.
AUDUSD is retreating from daily highs of 0.6988, as bulls take a breather after the latest leg higher. Investors assess the comments from the Reserve Bank of Australia (RBA) Governor Philip Lowe, as well as, the June meeting minutes.
The extended rebound in the aussie comes on the heels of the ongoing sell-off in the US dollar across its major peers, as risk-on flows dominate the European session and dent the buck’s safe-haven appeal. Markets seem to be shrugging off the looming recession risks.
Bulls, however, sense caution amid fresh lockdowns in Shenzhen and Macau, as covid outbreaks spread to southern China. “A single local case in Shenzhen detected on Saturday triggered mass testing and neighborhood lockdowns in some parts of the technology hub. Two cases were eventually reported for Saturday, with none on Sunday,” per Bloomberg.
All eyes now remain on the US housing data and the prepared remarks of Fed Chair Jerome Powell’s testimony, which will be due on the cards later in the NA session.
From a short-term technical perspective, AUDUSD has stalled its upside, as bulls lost momentum once again below the critical 0.7000 level, which is the 38.2% Fibonacci Retracement (Fibo) level of the latest decline from the June 7 highs of 0.7247 to the June 14 lows of 0.6850.
That said, the aussie could ease further towards the 23.6% Fibo level of the same descent at 0.6944 should bears take over control.
Monday’s low of 0.6917 will be next on sellers’ radars. The 14-day Relative Strength Index (RSI) is trading flatlined but below the 50.00 level, suggesting that upside attempts are likely to remain shallow.
AUD/USD: Daily chart
Alternatively, if the price manages to find acceptance above the aforesaid critical resistance at 0.7000, then a fresh upswing towards 0.7050 cannot be ruled out. At that price zone, Friday’s high and 50% Fibo level coincide.
A sustained move above that barrier is needed to regain the upside traction towards the confluence of the 61.8% Fibo level and bearish 21-Daily Moving Average (DMA).
AUD/USD: Additional levels to consider
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.