- AUD/USD off the lows, not out of the woods yet.
- Covid fears and Australian-China trade woes weigh on the aussie.
- Technical setup remains in favor of the bears.
AUD/USD is on a steady decline following Monday’s rally to two-month highs of 0.7340. The spot has given up over 200-pips and remains poised to breach the 0.7200 support area.
The return of the global economic growth concerns amid surging coronavirus cases has dampened the appetite for higher-yielding assets such as the AUD. Further, rife Australian-Sino trade tensions also remain a weight on the aussie.
From a technical perspective, the recent gradual correction has carved out a falling channel on the hourly chart, as the bulls now battle the critical 200-hourly moving average support at 0.7230. The major dipped to fresh weekly lows at 0.7222 in early Asia.
The recovery momentum could extend only on a firm break above the bearish 21-HMA at 0.7243, above which the bulls could target the 50-HMA hurdle at 0.7263.
Alternatively, a breach of the rising trendline support at 0.7215 could put the 0.7200 level at risk, paving way for more declines.
The hourly Relative Strength Index (RSI) edges higher but remains in the bearish zone, near 43.50, suggesting that the bounce appears short-lived.
AUD/USD: Hourly chart
AUD/USD: Additional levels
