August 17, 2022 12:15 AM ET
By: AnalysisWatch
AUD/USD continues its downtrend this week after Tuesday's brief breather as bears welcome the declining Australian wage price index.
The miss in Australian wage data suggests that the RBA may slow its tightening path amid early signs of cooling inflation. Thursday's employment data will therefore hold the key to the RBA's future policy.
The spot market's downside remains limited, however, as the RBNZ has held out the prospect of a rate hike and the U.S. dollar is consolidating across the board as attention turns to the minutes of the Fed's July meeting. The US dollar index is trading at 106.42, down 0.07% on the day.
From a short-term technical perspective, the pair is receiving temporary support from the upward-pointing 21-day moving average (DMA) at 0.6981.
A break of the latter would bring into play the horizontal 100 DMA at 0.6966. A sharp decline towards the slightly bullish 50 DMA at 0.6896 could be in the offing if the bears break the 100 DMA.
Therefore, it would be safe to say that the sell-off triggered after a rejection at the critical horizontal 200-Daily Moving Average (DMA) at 0.7120 could be facing exhaustion.
Buyers need to crack the daily high of 0.7070, above which lies 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-DMA are located.
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