The AUDUSD edges higher in early Monday after 1.2% drop on Friday, when the pair broke below previous low at 0.6828 (May 12) and hit new two-year low at 0.6815.
Friday’s close below 0.6828 low was a bearish signal, though bears face headwinds here and may hold in extended consolidation before resuming.
Technical studies on daily chart are negative and adds to bearish sentiment on global growth worries that continues to hurt risk appetite.
Traders await Tuesday’s RBA policy meeting, with wide expectations for the second consecutive 0.5% hike that will push the rate to 1.35%, as the central bank puts all efforts to curb soaring inflation which is expected to hit 7% this year, with RBA statement expected to remain hawkish.
Focus is also on Fed minutes due on Wednesday, with the US central bank also seen maintaining hawkish stance, with growing expectations for more aggressive action on 0.75% hike.
Upticks face initial resistance at 0.6900 (falling 10DMA) which should ideally cap, while break here would ease downside pressure and open way for test of strong barriers at 0.7000/60 (psychological / base of thick daily cloud) where extended upticks should stall and offer better selling opportunities.
Bears eye initial target at 0.6758 (50% retracement of 0.5509/0.8007, Mar 2020/Feb 2021 rally), violation of which would risk acceleration towards 0.6643 (Jan 2019 spile low) and 0.6463 (Fibo 61.8%).
Res: 0.6871; 0.6900; 0.6964; 0.7000.
Sup: 0.6828; 0.6793; 0.6758; 0.6643.
