- AUD / USD struggles to capitalize on its intraday rally from a one-week low.
- Optimistic expectations from the Fed act as a tailwind for the USD and limit the pair’s gains.
- The technical setup favors bears amid renewed fears around COVID-19.
The AUD / USD pair attracted some buying near the 50% Fibonacci support of the recent move of 0.6993-0.7188 and halted the previous day’s retracement from the 0.7175-80 area. However, the intraday recovery attempt from a week-long low touched early Tuesday lacked bullish conviction and remained limited near the breaking point of horizontal support at 0.7135-40.
The US dollar trimmed a portion of its intraday losses following the release of the hotter-than-expected US PPI producer price index, which reinforced optimistic expectations ahead of the Fed. Apart from this, concerns about the possible economic consequences of the Omicron variant propped up the safe-haven USD. This, coupled with cautious market sentiment, acted as a headwind for the higher perceived risk Aussie.
Meanwhile, the technical indicators on the daily chart, although they have been recovering from lower levels, are still in bearish territory. Furthermore, the oscillators on the 1 hour chart have again started to gain negative traction and favor the bears. That said, it will be prudent to wait for an acceptance below the 0.7100 level before positioning for any further decline.
Next, the AUD / USD pair could become vulnerable to accelerate the slide towards intermediate support near the 0.7060 region. The downward move could further extend towards challenging the key psychological level of 0.7000, or the yearly low set earlier this month. Some continuation selling should pave the way for the resumption of the bearish move witnessed since late October.
On the other hand, the 0.7135-40 region could continue to act as immediate resistance. Any further bullish movement could still be seen as a selling opportunity near the 0.7175-80 zone, which if decisively outperformed could negate the bearish bias. The AUD / USD pair could then break above the 0.7200 level and test the 0.7225 resistance before aiming to regain the round 0.7300 level in the near term.
AUD / USD 1 hour chart
AUD / USD key levels
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