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  • AUD/USD continues to drop as risk sentiment sours.
  • US Dollar is gaining strength at the same time.
  • US Treasury yields are finding stability.

The AUD/USD analysis remains broadly on the bearish side. The pair dropped to new lows at 0.7316, with a daily loss of 0.30% ahead of Tuesday’s European session. The risk barometer stalled near an annual low as sellers anticipated new traces of the boring RBA stance and the inaction of PBOC. However, the US dollar’s strength and concerns over the Delta variant have recently turned to the proposal.

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The US Dollar Index (DXY) pushed bids up to 92.88, above a four-day uptrend close to a three-month high with a daily gain of 0.06%. In addition to virus concerns, the DXY bulls appear to have recently benefited from the hiatus after the US Treasuries stabilized near their lowest point in February.

South Australia has announced a new seven-day closure, while Victoria will maintain operating restrictions for another week. In addition, minor Covid infections were reported in Sydney on Day 4 and a tweet from Australian Health Minister Greg Hunts reporting that Australia will be dropping a million doses of Pfizer vaccine per week.

It is noteworthy that the updated infrastructure bills of US President Joe Biden concerned buyers of the US bonds. However, the US Treasury yields offered the press 1 basis point (bp) of 1.19% for 10-years bonds. On Wednesday, US Senate President Chuck Schumer announced a vote on the Infrastructure Act of US President Joe Biden.

Elsewhere, the US has blamed China for a recent cyberattack, and elsewhere, it has also raised UK travel warnings.

Stock futures are making a small profit in all of these games, but Asia Pacific stocks are still available, leaving hope for AUD/USD sellers. In addition to the above risk factors, the performance of the US real estate market and a steady upward trend are critical for the new direction.

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AUD/USD technical analysis: Sell on strength?

AUD/USD bears need to close below 0.7340 for the day to target the lows of Nov 2020. The next target for the bears could be the peak of October at 0.7240. In the meantime, a corrective recovery towards the threshold of 0.7400 cannot be ruled out.

AUD/USD 4-hour chart analysis
AUD/USD 4-hour chart analysis

The key moving averages on the 4-hour chart are pointing lower while the recent bars are extremely bearish. The volume is clearly bearish. Any upside effort will likely be shallow and may provide a selling opportunity to the market.

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