Australian Dollar faces heat as market mood sours

  • Investors have turned risk-averse ahead of the US PCE Price Index data.

  • The formation of an Ascending Triangle indicates sheer volatility contraction.

  • The RSI (14) has shifted into the 40.00-60.. range, which indicates an exhaustion in the upside momentum.

The AUD/USD pair has corrected sharply to near 0.7100 in the early European session. The Aussie asset has sensed selling pressure as investors have turned risk averse ahead of the release of the United States Personal Consumption Expenditure (PCE) Price Index data. Meanwhile, an improvement in the safe-haven’s appeal has strengthened the US Dollar Index (DXY).

S&P500 futures has demonstrated a sell-off as further interest rate hikes by the Federal Reserve (Fed) might accelerate recession fears. The 10-year US Treasury yields has added gains further to near 3.53%.

On an hourly scale, AUD/USD is oscillating in an Ascending Triangle chart pattern that indicates a sheer contraction in volatility. The upward-sloping trendline of the chart pattern is plotted from January 25 average price at 0.7061 while the horizontal resistance is placed from January 26 high around 0.7140.

The 20-period Exponential Moving Average (EMA) at 0.7110 has overlapped the asset, which indicates a rangebound acution profile.

It is observed that the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00, which conveys that the bullish momentum has faded now.

Should the asset breaks above January 26 high at 0.7142, Aussie asset will deliver a breakout the Ascending Triangle, which will drive the major towards the round-level resistance of 0.7200. A breach of the latter will expose the asset for more upside toward June 3 high at 0.7283.

On the contrary, a downside move below December 29 low at 0.6710 will drag the major further toward December 22 low at 0.6650 followed by November 21 low at 0.6585.

AUD/USD hourly chart


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