Yesterday, the Aussie started the week had no volatility as Australian markets and banks were closed in observance of the Australia Day.
This morning, the pair fell to 0.7680, its lowest in the week during the US session, but managed to recapture the 0.7700 level ahead of the daily close. The AUDUSD traded combined with sentiment, falling early in the US session as US indexes tumbled on speculation further Covid-19 relief would be delayed a couple of months.
On the data side, the focus is on the Aussie Q4 Consumer Price Index booked for release on Wednesday. Weaker-than-expected inflation numbers would put the question mark on the economic recovery and justify the Reserve Bank of Australia’s dovish stance, possibly drawing offers for the AUDUSD.
The AUDUSD pair is at risk of extending its decline in spite of its latest recovery. At the 4-hour chart, we can see that the 20 and 200 SMAs converge around 0.7735, providing dynamic resistance. The 200 SMA maintains its bullish trend around 0.7640. Technical indicators hold within negative levels without signs of bearish exhaustion. A sharper decline is to be expected once below the 0.7640 price zone.
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