The AUD/USD pair witnessed a dramatic turnaround on Wednesday
The AUD/USD pair witnessed a dramatic turnaround on Wednesday and witnessed aggressive selling near the 0.6200 mark during the early North American session. The pair has now surrendered its intraday gains and was last seen trading around the mid-0.6700s region, nearly unchanged for the day. The US dollar regained positive traction and shot to a fresh 20-year high in reaction to red-hot US consumer inflation figures, which reaffirmed hawkish Fed expectations. Apart from this, a fresh bout of selling in the equity markets further underpinned the safe-haven buck and drove flows away from the risk-sensitive aussie.
From a technical perspective, the AUD/USD pair has been trending lower over the past four weeks or so along a downward-sloping channel. This points to a well-established bearish trend and supports prospects for additional near-term losses. The emergence of fresh selling at higher levels further validates the negative outlook. Hence, a subsequent slide back towards the 0.6710 area, or over a two-year low touched on Tuesday, remains a distinct possibility. Some follow-through selling below the 0.6700 mark would be seen as a fresh trigger for bearish traders and make the AUD/USD pair vulnerable to testing the descending channel support, around the 0.6660 area.
The latter should act as a strong base for spot prices, which if broken decisively should pave the way for an extension of the near-term downward trajectory. The AUD/USD pair might then accelerate the fall towards and challenge the 0.6600 round-figure mark before eventually dropping to the 0.6570 horizontal support zone. On the flip side, the daily peak, around the 0.6200 mark, now seems to act as immediate resistance. Any subsequent move up could still be seen as a selling opportunity and remain capped near the 0.6850-0.6860 confluence hurdle, comprising 100-period SMA on the 4-hour chart and the top end of the aforementioned descending channel.
The latter should act as a strong base for spot prices, which if broken decisively should pave the way for an extension of the near-term downward trajectory. The AUD/USD pair might then accelerate the fall towards and challenge the 0.6600 round-figure mark before eventually dropping to the 0.6570 horizontal support zone. On the flip side, the daily peak, around the 0.6200 mark, now seems to act as immediate resistance. Any subsequent move up could still be seen as a selling opportunity and remain capped near the 0.6850-0.6860 confluence hurdle, comprising 100-period SMA on the 4-hour chart and the top end of the aforementioned descending channel.