Red Territory for AUDUSD as the Currency Pair Goes Down Under 

The AUDUSD currency pair explored deep waters on Tuesday as it approached a four-month low. A hawkish expectation around the Federal Reserve’s monetary policy tightening handed the bears ammunition to continue their momentum, with little technical support favouring the bulls. 

A more dovish RBA that is most likely nearing the end of their hiking cycle stands in stark contrast to the approach taken by the US Federal Reserve. The differential between the future paths of interest rates got priced in quickly on Tuesday, with the market now cautiously consolidating in anticipation of the US job reports and NFP numbers on Friday. 

Technical 

The downside rally met support at $0,6575, causing a slight bounce up in consolidation. The currency pair is likely to trade between this support and resistance at $0,6652 in the upcoming trading day until further US economic data becomes available. 

If the jobs data remain strong, the bears could retest the $0,6575 support in an attempt to break through to the downside in search of lower support at $0,6549. If momentum holds and bearish pressure breaks through this support, a shift toward the $0,6500 support is possible, as there is no immediate support following that might fight the bears. 

However, if the US jobs data moderates, the bulls could continue consolidating for a potential leg up to $0,6652. However, the monetary policy decision differential is likely to remain an upside cap for the currency pair. 

Summary 

The AUDUSD currency pair joined the general market in trending down on a hawkish US Fed. There is little data that could support the bleak technical outlook for the currency pair, opening up the downside potential toward $0,6549 and $0,6500 if current fundamentals remain unchanged. 

Sources: Koyfin, Tradingview, Reuters