The path of least resistance for the AUD/USD appears to be to the downside.
The Australian dollar is under pressure due to a comeback in the US currency and sluggish Chinese inflation.
On the daily chart of the Australian dollar, a falling wedge breakdown has been verified.
As the bears take a pause and await fresh trade impetus, the AUD/USD is consolidating the current run down to seven-month lows of 0.7409.
After China’s inflation numbers underwhelmed, the Australian dollar came close to testing the 0.7400 mark. A comeback in the US currency, as well as Treasury yields, backed up the downward trend amid risk aversion.
For new trading, the pair is looking forward to new covid updates and risk trends.
The currency pair’s daily chart suggests additional losses in the short term, especially after the bears verified a downside break of the falling wedge formation on Thursday.
As a result, if the daily lows are broken, the 0.7400 level will be tested, and the December low of 0.7338 will be investigated.
The 14-day Relative Strength Index (RSI) is currently at 31.06, just above the oversold level, indicating that there is still possibility for more decline.
After the 21-Daily Moving Average (DMA) pierced through the 200-DMA from above, signaling a bear cross earlier this week, the selling trend gathered traction.
To negate the near-term negative momentum, the AUD bulls would need a daily finish above wedge support-turned-resistance around 0.7472.
The bulls’ promises will next be tested by Thursday’s high of 0.7495./n
