- AUD/USD drops further as the US dollar rebounds amid risk-aversion.
- The aussie breaches the last line of defense for the bulls at 50-DMA.
- Bearish RSI targets 0.7300, with all eyes on US inflation, Australian jobs.
AUD/USD is accelerating its decline in early European hours, reaching fresh four-week lows near 0.7350, as the US dollar rebound gathers steam amid risk-off trades and firmer Treasury yields.
The market sentiment remains sour amid persistent worries over rising inflationary pressures and the global central banks’ reluctance to act, providing fresh bids to the safe-haven US dollar. China’s rising price pressures exacerbated the pain in the aussie.
Meanwhile, the rebound in the Treasury yields ahead of the US inflation data also dent the sentiment around the alternative higher-yielding investment asset in the aussie dollar.
Looking at AUD/USD’s daily chart, the pair has finally yielded a sustained break below the critical 50-Daily Moving Average (DMA) at 0.7369, which was the last line of defense for the bullish traders.
A fresh downswing towards 0.7300 cannot be ruled if the October 13 low of 0.7322 caves in.
The 14-Day Relative Strength Index (RSI) is pointing sharply lower below the midline, suggesting that there is more room for the extension of the two-day downtrend.
AUD/USD: Daily chart
On the flip side, the aussie bulls will challenge the 50-DMA support-turned-resistance on any recovery attempts.
Above that level, the 100-DMA at 0.7376 will immediately cap the further upside.
The aussie buyers will need a firm break above 0.7400 to extend its recovery momentum towards the previous week’s high of 0.7432.
AUD/USD: Additional levels to consider
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