AUD/USD Is At Risk Of Extending Its Slump And Retest The Year Low At 0.7105

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AUD/USD Current Price: 0.7236

• RBA Meeting Minutes taking centre stage in a risk-averse environment.
• Gold managed to change course and ended the day with gains, limiting AUD/USD decline.
• AUD/USD is at risk of extending its slump and retest the year low at 0.7105.

The AUD/USD pair closed in the red for a third consecutive day, currently trading at around 0.7235. AUD/USD hit an intraday low of 0.7219 a fresh September low, undermined by substantial losses in global equities. Asian indexes finished the day mixed, but European and American ones plummeted, with the DJIA losing over 800 points. The slump was triggered by concerns about global economic progress following news that one of the biggest Chinese property companies may fall into default on a $305 billion financial liability.

The better performance of gold during the American afternoon put a temporal halt to the pair’s decline, although further declines are still likely. The focus now shifts to the Reserve Bank of Australia Meeting Minutes. The central bank has maintained its decision of reducing its weekly bond buying from $5 billion to $4 billion, but delay the end of the entire package until at least February, due to the latest Delta coronavirus outbreak that keeps most of the country under restrictive measures.

AUD/USD short-term technical outlook

The AUD/USD pair is trading a handful of pips below the 61.8% retracement of its latest daily advance at around 0.7250, the immediate resistance level. Technical readings in the daily chart suggest that the slump will likely continue, as the pair remains far below its moving averages, as technical indicators keep heading firmly lower within negative levels.

In the 4-hour chart, the 20 SMA heads lower below the longer ones and above the current level, while technical indicators consolidate within negative levels, reflecting prevalent selling interest. A steeper decline could be expected on a break below 0.7210, the immediate support level, with sellers looking for a retest of the year low at 0.7105.

Support levels: 0.7210 0.7170 0.7125

Resistance levels: 0.7250 0.7290 0.7335

Image by Shutterbug75 from Pixabay

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.