AUD/USD extends post RBA losses to 0.6950, teases weekly bullish channel breakdown

  • AUD/USD takes offers to renew intraday low, pullback from 1.5-month high.
  • RBA’s rate hike couldn’t impress bulls amid uncertainty over the next move.
  • US-China jitters, economic slowdown fears amplify risk-aversion and exert downside pressure on the quote.
  • 200-SMA adds to the downside filters, oscillators hints at further weakness.

AUD/USD bears ignore the Reserve Bank of Australia’s (RBA) Interest Rate Decision while extending pullback from the monthly high ahead of Tuesday’s European session. That said, the Aussie pair takes offers to refresh daily low near 0.6950 by the press time.

The RBA matched the market’s expectations of announcing 50 basis points (bps) rate hike, the fourth in 2022, while inflating the benchmark rate to 1.85%. However, the RBA Statement that says, “The central bank is not on the pre-set path in normalizing rates,” appeared to have lured the AUD/USD bears.

On a different page, chatters surrounding the US-China tussle over US House Secretary Nancy Pelosi’s visit to Taiwan and the likely hardships for Chinese chipmakers appear to weigh on the market sentiment, as well as on the AUD/USD prices. On the same line could be the dragon nation’s readiness for a military drill in Bohai, South China Sea. Furthermore, headlines suggesting Chinese policymakers’ lack of confidence in this year’s Gross Domestic Product (GDP) forecasts also contribute to the risk-off mood and drown the quote.

Elsewhere, fears of economic slowdown take clues from the latest PMIs from the US and Europe, which in turn roils the market’s mood and favors AUD/USD sellers. Also challenging the sentiment could be Fed Chair Jerome Powell’s indirect signals that the hawks are running out of steam.

While portraying the mood, shares in the Asia-Pacific zone and the US stock futures print losses. However, US 10-year bond coupon declines 5.5 basis points (bps) to 2.55% at the latest and challenges the bears, by way of the US dollar weakness. That said, the US Dollar Index (DXY) refreshed the monthly low before bouncing off 105.00.

Looking forward, Fedspeak and headlines surrounding China may entertain AUD/USD traders ahead of Friday’s RBA Rate Statement and the US employment data for July.

Technical analysis

AUD/USD sellers attack the lower line of a one-week-old bullish trend channel amid bearish MACD signals and the downbeat RSI (14). That said, the quote’s inability to cross the 61.8% Fibonacci retracement of the June-July downside joins downbeat oscillators to keep sellers hopeful.

However, a clear downside break of 0.6950 becomes necessary for the AUD/USD bears before targeting the 200-SMA level surrounding 0.6885.

During the quote’s weakness past 0.6885, the 0.6770 and 0.6720 may act as buffers before directing the sellers towards the yearly low marked in July near 0.6680.

Alternatively, recovery moves may aim for the 0.70000 threshold ahead of again challenging the aforementioned key Fibo. level near 0.7055.

Even if the quote rises past 0.7055, the upper line of the mentioned channel, at 0.7060 by the press time, will precede the mid-June swing high near 0.7070 to challenge short-term AUD/USD buyers.

AUD/USD: Four-hour chart

Trend: Further weakness expected

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