Title: AUD/USD battles 0.6900 after rejection at 50 DMA

July 25, 2022 01:13 AM ET

By: AnalysisWatch

AUD/USD consolidates the recovery from the 0.6880 region but remains under pressure given the general risk aversion.

Investors are concerned about a likely global recession while major central banks promise to control inflation through major interest rate hikes.

Growing concerns about an economic slowdown are offsetting expectations of a 75 basis point rate hike by the RBA, which could be amplified if Australian inflation data comes in better than expected this week.

Traders are also waiting for the U.S. Federal Reserve's highly anticipated rate hike decision to improve the dollar's valuation. Meanwhile, Australians will digest remarks by Prime Minister Anthony Albanese, who called on China to lift its trade sanctions against Australia to repair fractured relations.

Meanwhile, a record number of COVID-affected Australians are in hospital as Omicron levels rise, further increasing the burden on the country.

From a short-term technical perspective, AUD/USD is retreating from its monthly highs after hitting resistance at the 50-Daily Moving Averages (DMA) at 0.6975 last Friday.

Bears are now targeting the horizontal 21 DMA at 0.6845 should the daily low of 0.6879 give way.

The 14-day Relative Strength Index (RSI) is turning south and attacking the midline, justifying the renewed downside move.