- AUD/USD witnessed some selling on Tuesday and eroded a part of the overnight gains.
- Failure near the 0.7815 area constitutes the formation of a bearish double-top pattern.
- Bears might still wait for a break below the 0.7700 mark before placing aggressive bets.
The AUD/USD pair maintained its offered tone through the early North American session and was last seen hovering near the lower end of its intraday trading range, around the 0.7770 region.
A modest pickup in the US Treasury bond yields extended some support to the US dollar. Apart from this, worries that surging COVID-19 infections in some countries could derail the global economic recovery further underpinned the safe-haven greenback. This, in turn, was seen as a key factor that drove flows away from the perceived riskier aussie.
From a technical perspective, the AUD/USD pair now seems to have formed a bearish double-top near the 0.7815 region. The reversal pattern, however, is not confirmed until key support is broken. Hence, it will be prudent to wait for sustained weakness below the 0.7700 mark before traders start positioning for any further near-term depreciating move.
Meanwhile, technical indicators on the 1-hour chart have been gaining bearish traction but are still holding in the positive territory on 4-hour/daily charts. The set-up supports prospects for the emergence of some dip-buying at lower levels, further warranting some caution for aggressive bearish traders amid the prevalent selling bias around the USD.
A convincing break below the 0.7700 handle will confirm a breakdown and accelerate the fall towards the 0.7660 horizontal resistance breakpoint, now turned support. Some follow-through selling should pave the way for an extension of the downward trajectory and has the potential to drag the AUD/USD pair further towards the 0.7600 round-figure mark.
This is followed by support near the 0.7585-80 region, below which bears are likely to challenge monthly swing lows, around the 0.7530 region. The AUD/USD pair could eventually drop to the key 0.7500 psychological mark.
On the flip side, the 0.7800 mark now seems to act as an immediate hurdle ahead of the 0.7815 supply zone. A sustained move beyond the mentioned barrier will negate the negative outlook, instead will be seen as a fresh trigger for bullish traders. The AUD/USD pair might then surpass an intermediate resistance near mid-0.7800s and climb to the 0.7900 mark.
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