Title: AUD/USD Price Analysis: Intraday recovery falters near mid-0.6500s despite weaker USD
October 4, 2022 04:32 AM ET
The AUD/USD currency pair recovers its previous day's losses, led by the Reserve Bank of Australia's less-than-expected 25 basis point interest rate hike, and climbs above a one-week high at the start of European trading. However, the intraday uptrend remains without follow-through buying and stalls just before the 0.6500 level.
The U.S. dollar continued its recent sharp correction from last week's two-decade high in the face of a further decline in U.S. government bond yields. Apart from that, the risk impulse continues to weigh on the safe-haven greenback, driving trade flows towards the risk-sensitive Aussie.
By and large, the AUD/USD pair traded within a narrow trading range last week. The range-bound price action forms a rectangle on the intraday charts and indicates the indecision of traders regarding the next leg of a directional move.
Against the background of the sharp decline from the monthly high in August, the formation could still be classified as a bearish consolidation phase. Moreover, the technical indicators on the daily chart, although recovered from lower levels, continue to move in the bearish zone.
This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside and should urge bullish traders to be cautious. Nevertheless, some follow-through buying will reverse the bearish bias and set the stage for a meaningful upside move in the near term.
The AUD/USD pair could then build on the recent bounce from its lowest level since April 2020 and reclaim the round 0.6600 level. This is followed by the 0.6620-0.6625 resistance zone, above which a renewed short-covering move could lift spot rates to the 0.6700 level.