AUD/USD traded south during the European morning Monday, after it hit resistance near the 0.7545 barrier. The pair continues to trade below a prior downside support (now turned into resistance) line, drawn from the low of the 8th of February, and also below all three of our moving averages. Therefore, we see a negative near-term outlook.
If the bears manage to stay in the driver’s seat, we would expect them to challenge the 0.7490 barrier soon. However, we would like to see a decisive dip below 0.7475, a support marked by the lows of the 1st and 2nd of May, before we get confident on larger downside extensions. Such a dip would confirm a forthcoming lower low on both the 4-hour and daily charts and could pave the way for our next support territory of 0.7420, defined by the low of the 5th of June 2017.
Shifting attention to our short-term oscillators, we see that the RSI turned down and fell back below its 50 line, while the MACD has topped near zero and now looks ready to move below its trigger line. These indicators suggest that momentum is turning back to the downside, which supports the case for some further declines, at least in the short run.
On the upside, a move back above the crossroads of the 0.7560 resistance and the aforementioned downside line drawn from the low of the 8th of February could signal a change in the short-term sentiment. The pair could initially aim for the 0.7585 hurdle, the break of which could set the stage for our next resistance of 0.7620.
However, even if this is the case, the medium-term outlook would still be negative in our view. The rate would still be trading below the downtrend line taken from the peak of the 16th of February. Thus, we would treat any possible near-term reversal as a corrective rebound of the prevailing medium-term downside path.
