The AUD/USD pair showed a negative bias for the second consecutive day on Wednesday, unable to sustain its overnight rebound from the 0.7200 level. Despite this, spot prices hovered around 0.7235, indicating a lack of strong bearish conviction as investors awaited the Trump-Xi summit.
Meanwhile, the US Dollar (USD) remained strong, nearing a one-week high. This strength was fueled by renewed expectations for a US Federal Reserve (Fed) interest rate hike, following Tuesday’s higher-than-expected US consumer inflation data. Additionally, diminishing prospects for a US-Iran peace deal bolstered the USD’s safe-haven appeal, thereby limiting gains for the risk-sensitive Australian Dollar. Counteracting these pressures, the Reserve Bank of Australia’s (RBA) hawkish stance continued to provide support for the AUD/USD pair.
Technically, spot prices are holding above the 100-period Exponential Moving Average (EMA), suggesting a slight bullish bias. The Relative Strength Index (RSI) positioned just above the neutral 50 line also indicates potential for modest upward movement. However, the Moving Average Convergence Divergence (MACD) has flattened slightly below zero, pointing to only tentative momentum. Therefore, it would be advisable to confirm a sustained break above the mid-0.7200s before considering new bullish positions on the AUD/USD.
Looking to the downside, initial support lies at the 100-period EMA, near 0.7190. A breach of this level could trigger a more significant corrective pullback, undermining the current positive sentiment. As long as the AUD/USD remains above this moving average, any downward movements are expected to be limited, maintaining focus on whether buyers can solidify the recovery and achieve a more decisive advance in the upcoming sessions.
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