After finding some support defined by the 50% Fibonacci level of the 0.6993-0.7188 recent run higher, the AUD/USD pair saw some trading near the 0.7175-80 area, which helped to halt the previous day’s drop from the 0.6993-0.7188 range.
This week’s attempt at an intraday rebound from a one-week low, which occurred early on Tuesday, failed to generate enough bullish conviction to move the pair over the 0.7135-40 horizontal resistance breakpoint.
Following the announcement of the hotter-than-expected US Producer Price Index, which bolstered hawkish Fed forecasts, the US Dollar recovered some of its intraday losses.
Additionally, fears about the possible economic ramifications of the Omicron version helped keep the safe-haven greenback afloat. The perceived riskier Australian Dollar faces an uphill battle with the cautious market environment.
AUD/USD CHART Source: Tradingview.com
Daily, technical indicators have recovered from their previous lows but have maintained their bearish bias. Furthermore, indicators on the 1-hour chart have again begun to generate negative traction, which is favorable to bearish traders.
Considering the foregoing, it would be wise to wait until acceptance falls below the 0.7100 level before positioning for any further decline.
Once the AUD/USD pair becomes vulnerable, the pair may accelerate its decline, targeting intermediate support near the 0.7060 zone.
The downward trajectory might be prolonged even further, with the crucial psychological level of 0.7000, or the year-to-date low, set earlier this month, being challenged.
If there is any more selloff, it should be enough to signal a resumed decline in the bearish trend that has been evident since late October.
As an alternative, the 0.7135-40 zone may continue to operate as a primary barrier. The 0.7175-80 zone might still be considered a selling opportunity in the event of a further upward rise, which, if cleared firmly, could neutralize the bearish bias in the market.
The AUD/USD pair may potentially break through the 0.7200 mark and test the 0.7225 resistance level before attempting to recapture the 0.7300 rounded figure level shortly.
China’s property market will have a massive hangover, which will hurt Australia’s economic model. A tidal wave of debt from China will stop Australia’s macroeconomic stability.
COVID-19 has taken a toll on the economy, says RBA Governor Lowe. There is a minor difference in the yields of Australian and US government bonds. China’s trade sanctions against Australia are going to keep going.
The world will come out of the crisis, which will hurt Australia’s advantage. Xi Jinping wants to focus on Australia instead of the United States and Europe.
Many people in Australia do not like Biden’s plan to go green. China would seem to have stopped the import of coal from Australia.