AUD/USD Crumbles Beneath 61.8% Fibonacci Level Despite Weaker US Inflation

  


  • The AUD/USD is trading with a bearish bias at the 0.7338 level despite weaker US inflation figures from the Bureau of Labor Statistics.
  • The AUD/USD pair has also violated the 61.8% Fibonacci Retracement level, and below this, the odds of a selling bias remain potent.
  • Forex trading market participants may sell below the $0.7358 level to target $0.7320 and $0.7287. 

The AUD/USD currency pair failed to stop its previous-session bearish rally during Tuesday’s US trading session. It remained well offered near the 0.7350 level. However, the declines have appeared after the Reserve Bank of Australia (RBA) Governor, Philip Lowe, downplayed speculation about an earlier than expected interest rate hike. The AUD/USD is trading with a bearish bias at the 0.7338 level despite weaker US inflation figures from the Bureau of Labor Statistics.

If you are interested in trading AUD/USD with forex robots, check out our guide.

Meanwhile, Hurricane Ida, Typhoon Chanthu, and Tropical Storm Nicholas appear to be weighing in on Australia’s perceived riskier citizens. On the contrary, the modest US dollar bearish bias and the prevalent bullish market sentiment extended some support to the currency pair to limit its more profound losses. The AUD/USD currency pair is trading at 0.7358 and consolidating in the range between 0.7325 and 0.7374.

As we already mentioned, the currency pair came under some selling pressure on the day after the Reserve Bank of Australia (RBA) Governor, Philip Lowe, downplayed speculation about an earlier than expected interest rate hike. This is seen as one of the key factors that kept the AUD/USD under pressure.

AUD/USD is in a bearish mode despite a weaker dollar 

The US dollar’s weakness, triggered by multiple factors, extended some support to the currency pair to help limit any deeper losses. The prevalent upbeat market mood tends to undermine the safe-haven US dollar. 

US inflation figure disappoints.

The Bureau of Labor Statistics reported a worse than expected consumer price index for the US. The US dollar lost some further ground after the release of softer-than-expected US consumer inflation figures. As per the latest data, the headline CPI missed market expectations and dropped to 0.3% in August from 0.5% in the previous month. Every year, the CPI fell by 5.3%, as expected. Therefore, the broad-based US dollar weakness gave some relief to the AUD/USD currency pair.

Risk-on Sentiment to Underpin AUD/USD Pair

As depicted by a generally positive tone around the equity markets, the market’s risk-on environment gave some support to the perceived riskier Aussie. It helped limit any deeper losses. The market’s trading sentiment maintained its overnight positive moves during Tuesday and remained well bid as the optimism over the faster vaccinations helped the market stay bid. Meanwhile, the easing of tensions over Iran’s nuclear issue positively impacted the market’s trading sentiment.

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Investors are still convinced that the Fed will ultimately start rolling back its massive pandemic-era stimulus later this year. This was triggered by a goodish intraday move up in the US Treasury bond yields, which acted as a tailwind for the US dollar and kept a lid on any meaningful gains for the AUD/USD currency pair.

Weaker US inflation figures

AUD/USD 4-Hour Timeframe – Fibonacci Correction

AUD/USD Price Forecast – Technical Levels

S3 0.7246

S2 0.7308

S1 0.733

Pivot Point 0.737

R1 0.7392

R2 0.7432

R3 0.7494

AUD/USD Achieves 61.8% Fibonacci Correction –  Weaker US inflation figures

The AUD/USD currency pair is trading sideways in a tight trading range of 0.7380 – 0.7330 despite weaker US inflation figures being released. Overall, the AUD/USD price outlook remains bearish beneath the 50-period EMA. Moreover, the AUD/USD pair has also violated the 61.8% Fibonacci Retracement level, and below this, the odds of a selling bias remain potent.

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On the 4 hour timeframe, the AUD/USD is lower towards the following support region of 0.7338. The 61.8% Fibonacci retracement level is now working as a resistance for the AUD/USD.

Currently, the AUD/USD currency pair is trading at the 0.7338 level. The violation of the 0.7358 trading level is likely to extend the AUD/USD towards the next support level of 0.7320 and 0.7287. The market is trading precisely in line with my previous AUD/USD trade idea.  

For the moment, the AUD/USD immediate support is at the 0.7287 level. A closing of candles above this level can trigger a buying trend in the pair. Whereas, a breakout of the 0.7360 level can extend the buying trend until the 0.7405 and 0.7475 levels.

Taking a look at the 50 period EMA (exponential moving average – red line), it is holding around the 0.7380 level. The formation of 4-hour candles beneath this level supports a solid selling bias in the AUD/USD currency pair. Besides, the leading indicator, Stochastic RSI, lingers beneath 50, persevering the bearish trend in the AUD/USD.

Therefore, Forex trading market participants may sell below the $0.7358 level to target $0.7320 and $0.7287. Alternatively, traders can take a buying position above the $0.7355 level today. All the best!

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