AUD/USD keeps the red near YTD lows, US data/Powell’s testimony eyed
• Bullish USD sentiment keeps exerting downward pressure.
• Technical selling below 200-DMA aggravates the bearish slide.
• Traders eye US data/Powell’s testimony for fresh impetus.
The AUD/USD pair maintained it’s offered tone but has managed to recover few pips from 2-month lows, touched during the European session.
The prevalent strong bullish sentiment surrounding the US Dollar, especially after the Fed Chair Jerome Powell's upbeat comments on the US economy on Tuesday, has been one of the key factors behind the pair's ongoing downfall.
Adding to this, a follow-through technical selling, following yesterday's bearish break below the very important 200-day SMA, further collaborated to the pair's steep downfall to its lowest level since December 26.
The pair has now reversed over 175-pips from weekly tops, near the 0.7900 handle set on Monday. With short-term technical indicators still far from pointing to near-term oversold conditions, the bearish slide seems more likely to get extended in the near-term.
Traders now look forward to the US economic docket, featuring the release of personal income/spending data, along with the Fed's preferred inflation gauge - Core PCE Price Index, and the usual weekly jobless claims, for some short-term opportunities. Later in the day, the US ISM manufacturing PMI and Powell's second appearance before the Congress might provide a fresh directional impetus.
Technical levels to watch
Valeria Bednarik, American Chief Analyst at FXStreet writes: “The short-term technical picture for the pair is bearish, as the mentioned level capped an attempt to recover, while in the 4 hours chart, the 20 SMA maintains a strong bearish slope well above the current level, as indicators hold steady near oversold territory. A break below the mentioned daily low should lead to a steeper decline toward the 0.7640 region, a strong static support area that once cleared could see the decline extending down to 0.7501, December low.”