AUDUSD Price Analysis: Descending channel resistance to cap recovery from two-year low

The AUD/USD pair once again showed resilience near the 0.6765-0.6760 area and staged a goodish bounce from over a two-year low set this week. Spot pri  |  07/07/2022 09:37
  • AUDUSD staged a goodish bounce from a two-year low and snapped a two-day losing streak.
  • Recession fears, Fed rate hike bets should underpin the USD and cap the risk-sensitive aussie.
  • A three-week-old descending channel also points to a well-established short-term downtrend.

The AUDUSD pair once again showed resilience near the 0.6765-0.6760 area and staged a goodish bounce from over a two-year low set earlier this week. Spot prices extended the steady intraday ascent through the early part of the European session and climbed to the 0.6830-0.6835 area, reversing weekly losses.

Upbeat Australian trade balance data, along with recovery in iron ore prices, offered some support to the resources-linked aussie. Adding to this, a slight improvement in the risk sentiment prompted some profit-taking around the safe-haven US dollar and benefitted the risk-sensitive Australian dollar.

That said, growing fears about a possible global recession should keep a lid on any optimistic move in the markets. Apart from this, the prospects for more aggressive Fed rate hikes should act as a tailwind for the greenback and further contribute to capping the AUDUSD pair, at least for the time being.

From a technical perspective, the recent downfall since mid-June along a downward sloping trend channel points to a well-established short-term bearish trend. Hence, any subsequent move up is more likely to meet with a fresh supply near the top end of the said channel, currently around the 0.6865 area.

This is closely followed by the 0.6900 mark, which coincides with the 100-period SMA on the 4-hour chart. Some follow-through buying would suggest that the AUDUSD pair has formed a bottom and will trigger an aggressive short-covering move, which should lift spot prices towards the 0.6955-0.6960 supply zone.

On the flip side, the 0.6800 round figure now seems to protect the immediate downside ahead of the 0.6765-0.6760 area. Failure to defend the said support levels would make the AUDUSD pair vulnerable to slide further, towards challenging the ascending channel support, currently around the 0.6715-0.6710 area.

A convincing breakthrough the latter, leading to a subsequent fall below the 0.6700 mark would be seen as a fresh trigger for bearish traders and pave the way for additional losses. The AUDUSD pair might then accelerate the fall towards the next relevant support near the 0.6655-0.6650 region.

AUD/USD 4-hour chart

fxsoriginal

Key levels to watch

 

Share

Popular News

Show More Popular News

Market Insight's Views

Market Insight analyses will provide both fundamental and technical comprehensions on FX
and other asset classes for Market Insight viewers

RISK WARNING

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC
        Back

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.

        register_ty

        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via info@marketinsight.com