The recent ascent of US Treasury yields, with the benchmark 10-year yields reaching a 16-year peak, coupled with apprehensions concerning China’s economic conditions, have been contributing factors to the US Dollar’s strength in recent weeks. However, anticipations of Federal Reserve Chair Jerome Powell’s upcoming speech at the central bank symposium in Jackson Hole, Wyoming, have introduced caution for the Greenback. 

The Jackson Hole Symposium is expected to shed light on the trajectory of interest rates, particularly on whether or not they will remain elevated, which could be pivotal in shaping the US Dollar’s outlook. Meanwhile, as global risk sentiment improves, the AUDUSD currency pair has rebounded out of a descending channel. Will this surge be the beginning of an uptrend, or is the currency pair too reliant on economic improvement from China?  

Technical 

The AUDUSD currency pair succumbed to a downward trend on the 4H Chart since the 50-day moving average crossed over the 100-day moving average. The price action attempted a reversal at the 50% level with a move above the 50-day moving average but met with resistance at the descending channel’s upper boundary.  

Since the currency pair broke out of the descending channel pattern, the 50-day moving average line poses a significant barrier for a reversal. If the price action surpasses the 0.64538 resistance set up by the 50-day moving average, the currency pair may be encouraged to retest the 0.64720 resistance at the 23.60% Fibonacci Retracement. However, the 0.64538 resistance could hold, which may encourage a leg down towards the 0.63672 major support and promote the continuation of a descending channel.  

Summary 

The AUDUSD currency pair rebounded after a descending channel pattern took the price action towards the 0.63672 major support. If downside momentum continues to subdue the currency pair, the price action may attempt to retest the major support. However, a move above the 50-day moving average could encourage a leg up towards the 0.64720 resistance. 

Sources: TradingView, Reuters