AUD/USD Price Analysis: Steady around 0.7400, but failure at 0.7450 clears the path for bears

  • AUD/USD extended its second consecutive day losses after central banks kept rates unchanged.
  • In the FX market, risk-averse mood weighed on the AUD boosts the greenback.
  • AUD/USD: Failure to reclaim 0.7450 would clear the path for sellers on its way towards 0.7170.

The AUD/USD slides as the Asian Pacific session begins, barely down 0.01%, trading at 0.7400 at the time of writing. The market sentiment was upbeat throughout Thursday, portrayed by global equity indices finishing in the green, led by US major indices reaching all-time new highs, except for the Dow Jones Industrial, which lost 0.09%. 

In the FX market, the risk-sensitive currencies were down, led by the British pound, which collapsed when the Bank of England (BoE) kept rates unchanged, despite some inflation worries expressed by some of its members, which ultimately backpedaled, as the vote to hold rates, was 7-2. Alongside Sterling, the AUD, the NZD, and the CAD, were also down, as safe-haven currencies were bid during the session.

Additionally, on Wednesday, the Federal Reserve unveiled that it is reducing the amount of its bond purchasing program by $15 billion, which was initially perceived as a dovish taper. Investors’ reaction prompted a sell-off of the greenback, but as of Thursday, the market reversed its course, as the US dollar was one of the gainers of the session.

AUD/USD Price Forecast: Technical outlook

Weekly chart

The AUD/USD pair is forming a bearish-engulfing candle pattern with strong bearish implications but requires a weekly close at 0.7450 to confirm its validity. In that outcome, the next support level would be the confluence of the 100 and the 200-week moving average (WMA) around the 0.7170-0.7200 area. Furthermore, the Relative Strength Index (RSI) is at 48 aims lower, confirming the downward bias.

Daily chart

In the daily chart, the AUD/USD pair bounced off the 100-day moving average (DMA) at 0.7377, retreating towards the 0.7400 figure. Nevertheless, it broke the strong support level now turned resistance at 0.7450m which could be viewed as a level where AUD/USD sellers would lean to open fresh offers as the pair has a downtrend bias, depicted by the 200-DMA above the spot price. Furthermore, the Relative Strength Index (RSI), a momentum indicator is at 47, aims lower below the 50-midline, adding another signal for AUD/USD sellers. However, caution is warranted, as the 50 and the 100-DMA are beneath the price action around the 0.7360-80 area, that in case of being breached, could open the door for further losses. The first support level would be the September 24 high at 0.7315.  A clear break of the latter would expose the September 30 low at 0.7169.

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