- AUD / USD extends US CPI-inspired losses and falls to week-long lows on Thursday.
- Acceptance below major confluence support has set the stage for further weakness.
- A sustained move back above the 0.7800 level is needed to nullify the short-term negative bias.
The AUD / USD pair has fallen to a week and a half lows during the first half of the European session, with bears now looking to extend the bearish momentum below the 0.7700 level.
The pair has struggled to capitalize on its modest intraday gains to the 0.7745 area and has encountered further selling, pressured by a combination of factors. This move marks the third negative day in the previous four and has pulled the AUD / USD pair away from the highest level since February 25, around the 0.7890 region, touched earlier this week.
After a brief consolidation, the US dollar has regained positive traction and extended gains inspired by the warmer-than-expected US CPI of the previous day. The prevailing sentiment of risk aversion, as shown by the extension of the sell-off in global stock markets, has benefited the safe-haven US dollar and pushed away the perceived riskier Australian dollar cash flows.
From a technical perspective, the latest move down has dragged the AUD / USD pair below confluence support, comprising the 100-day SMA, 50% Fibonacci from the positive move of 0.7531-0.7890 and a line. upward trend. The latter, together with another rising trend line, has formed the formation of a bearish ascending wedge pattern on the daily chart.
Meanwhile, the technical indicators on the daily chart have only just started to move into negative territory. Therefore, some subsequent selling will mark a short-term bearish breakout and accelerate the decline to the 61.8% Fibonacci, around the 0.7670 region. The AUD / USD pair could become vulnerable to extend the slide towards the 0.7600 level test.
On the other hand, the daily highs, around the 0.7745 region, close to the Fibonacci 38.2%, now appear to act as a strong immediate hurdle. A sustained move above this region should allow the bulls to target a rebound to the 0.7800 level. This mentioned level coincides with the 23.6% Fibonacci, which if clearly broken should pave the way for further gains for the AUD / USD pair.
AUD / USD daily chart
AUD / USD technical levels
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