August 16, 2022 01:25 AM ET
By: AnalysisWatch
The AUD/USD swings between gains and losses, trading above 0.7000 as the tug-of-war between bulls and bears extends to European trading.
After the risk-averse sell-off in the broad markets on Monday amid poor Chinese economic data, the Aussie struck calmer tones on Tuesday.
Major currencies are consolidating their recovery, with the recent uptick fueled by the RBA minutes, although the board said the central bank is not on a predetermined tightening path.
Asian markets have also rallied weakly in anticipation of further stimulus from Chinese authorities to revive the economy. The risk reset has halted the dollar rally for now and helped the Aussie to hold above 0.7000.
From a short-term technical perspective, the pair continues to find demand at lower levels as the 21 DMA crossed the 100 DMA upwards on a daily closing basis, confirming a bullish cross.
Therefore, it would be safe to say that the sell-off triggered after the rejection of the critical horizontal 200 daily moving average (DMA) at 0.7120 could be close to exhaustion.
The 14-day Relative Strength Index (RSI) has flattened above the midline, supporting the view that the "dips" should be bought.
Buyers need to crack the daily high of 0.7070, above which is the round number of 0.7100.
On the other hand, the immediate downtrend ceiling is at 0.7000, below which sellers will try to attack the demand area around 0.6970, where the 21 and 100 DMAs are located.
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