The Australian dollar accelerates lower in early European session on Tuesday, driven by risk aversion on further drop in Chinese stocks.
The situation with Covid-19 is mixed, as Victoria state is about to ease measures but New South Wales records new virus cases that continues to sour the sentiment and weigh on risk-sensitive Aussie dollar.
The picture on daily chart suggests that larger bears remain in play, following multiple failure of recovery attempt to break above falling 10DMA (0.7378) and today’s fresh weakness, which signals an end of brief correction from new multi-month low at 0.7289 (July 21).
Daily moving averages are in full bearish setup and momentum is heading south, deeply in the negative territory, maintaining negative signals.
Violation of 0.7289 low would signal bearish continuation and open way towards target at 0.7231 (Fibo 76.4% of 0.6991/0.8007 upleg/200WMA).
Falling 10 DMA marks solid resistance, followed by descending 20DMA (0.7430), with clear break here to ease bearish pressure. Investors focus on Wednesday’s end of Fed policy meeting to get more ideas about central bank’s next steps.
Res: 0.7378, 0.7397, 0.7409, 0.7430.
Sup: 0.7330, 0.7289, 0.7254, 0.7231.
