AUD/USD struggles near multi-week lows, around 0.7120 region

• AUD/USD remained under some heavy selling for the fourth straight session on Wednesday.
• The prevalent USD buying interest was seen as a key factor exerting pressure on the major.
• A positive tone around the equity markets failed to lend any support or stall the downfall.

The AUD/USD pair maintained its offered tone through the early European session and was last seen trading near six-week lows, around the 0.7120 region.

The pair extended this week’s bearish break through a near two-month-old ascending trend-line support and witnessed some follow-through selling for the fourth consecutive session on Wednesday. The downward momentum was exclusively sponsored by a turnaround in the sentiment surrounding the US dollar.

Concerns about the second wave of coronavirus infections and fears of renewed lockdown measures to contain the outbreak continued driving haven flows towards the USD. Meanwhile, Chicago Fed President Charles Evans struck a hawkish tone on Tuesday and provided an additional boost to the already stronger greenback.

The downfall could further be attributed to some technical selling below 50-day SMA support, around the 0.7200 round-figure mark. Even a positive tone around the equity markets, which tends to benefit the perceived riskier Australian dollar, failed to stall the ongoing slide to the lowest level since August 12.

It will now be interesting to see if the pair is able to find any support at lower levels or continues with its bearish trajectory below the 0.7100 mark, towards testing the 0.7060 horizontal support. Market participants now look forward to the release of flash US Manufacturing PMI prints for September. This, along with the Fed Chair Jerome Powell’s second day of the congressional testimony will influence the USD price dynamics and produce some meaningful trading opportunities.

Technical levels to watch