- AUD / USD witnesses a strong sell on Tuesday and falls below the 0.7700 level.
- The technical setup favors the bears and supports the prospects for further weakness.
- A subsequent fall below the 0.7620 area (monthly lows) would mark a further bearish breakout.
AUD / USD has continued to weaken below the 0.7700 level and has fallen to almost two-week lows just before the start of the European session on Tuesday. After setting a low near the ed 0.7670 level, the pair is managing to recover slightly to the 0.7685 region, still losing around 0.80% on the day.
An unusual coordinated move by the United States, Canada, the United Kingdom and the EU to impose sanctions on Chinese officials for human rights violations in Xinjiang has hit the Australian dollar. Aside from this, a softer risk tone has provided a modest boost to the safe-haven US dollar and further pushed monetary flows away from the perceived riskier Australian dollar.
From a technical perspective, a sustained break below the strong horizontal support at 0.7700 has been seen as a new trigger for bears. This, in turn, could have laid the groundwork for additional weakness. The bearish outlook is reinforced by the fact that the technical indicators on the daily chart have just started to move into negative territory.
Therefore, a subsequent decline towards the monthly lows, around the 0.7620 region touched on March 5, now seems like a clear possibility. This latest level coincides with the support of the 100-day SMA, which if decisively broken should pave the way for an extension of the recent sharp pullback from the key psychological level of 0.8000, the highest level since February 2018.
The AUD / USD pair could become vulnerable to dip below the support of the 100-day SMA, around the round level of 0.7600 and aim to test the next relevant support near the horizontal zone of 0.7530-25.
On the other hand, any attempt at a recovery move now could be seen as a selling opportunity and risks fading away fairly quickly. Bearish investors would look to enter near the 0.7700 level and any bullish movement is more likely to remain limited in that region.
AUD / USD daily chart
AUD / USD technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
