- AUD / USD was down on Thursday and broke three consecutive days of the winning streak.
- The setup still looks firmly tilted in favor of bearish traders amid resurgent USD demand.
- Any attempt at a recovery move could be seen as a short opportunity near 0.7300.
The pair AUD/USD witnessed some selling on Thursday and snapped a three-day winning streak amid resurgent demand for the US dollar. The pair maintained its offered tone during the early days of the American session and was last seen hovering around the daily lows, around 0.7250.
Investors now appear to be convinced that the Fed could still begin to reduce its pandemic-era stimulus amid concerns about the economic fallout from the Delta variant of the coronavirus. This was evident by the ongoing rally in US Treasury yields, which acted as a tailwind for the dollar.
The USD maintained its intraday gains after US economic growth for the second quarter revised up to an annualized pace of 6.6% from the 6.5% initially estimated. The reading, however, was slightly lower than the anticipated growth of 6.7% and was accompanied by a modest increase in Initial Weekly Unemployment Claims to 353,000.
From a technical perspective, this week’s strong recovery move from near 0.7100, or yearly lows, stalled before the round 0.7300 level. Given the recent break below a month-long trading range, the emergence of new selling suggests that the short-term bearish trajectory may still be far from over.
The negative outlook is reinforced by the fact that the technical indicators on the daily chart, although they have recovered from lower levels, are still in bearish territory. Furthermore, the oscillators on the 1 hour chart have been gaining negative traction, supporting the prospects for a further intraday decline.
A subsequent dip below the overnight lows, around the 0.7235 region, will reaffirm the bearish bias and make the AUD / USD pair vulnerable. The downward trajectory could drag the pair further below 0.7200, to test the next relevant support near 0.7150 before 0.7120.
On the other hand, the 0.7280 zone now appears to have emerged as a strong immediate resistance. Any subsequent positive movement could be seen as a short opportunity near 0.7300. This, in turn, could limit any further gains for the AUD / USD pair near the breaking point of the trading range support, around the 0.7330 region.
4 hour chart
Technical levels
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