AUDUSD at 0.67989 is having difficulty maintaining a recovery from a low that lasted one week.

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• AUD/USD struggles to defend corrective bounce off one-week low.

The pair currently trades last at 0.67989.

The previous day high was 0.6855 while the previous day low was 0.6753. The daily 38.2% Fib levels comes at 0.6792, expected to provide support. Similarly, the daily 61.8% fib level is at 0.6816, expected to provide resistance.

AUD/USD fails to defend the first daily gains in four while making rounds to 0.6800 during early Thursday morning in Canberra. In doing so, the Aussie pair aptly portrays the market’s indecision after witnessing mixed signals from the US Federal Reserve (Fed) Chairman Jerome Powell and China, not to forget the lack of ability to please Aussie bulls with the Reserve Bank of Australia’s (RBA) hawkish rhetoric.

In his bi-annual testimony to the House Financial Services Committee, Federal Reserve (Fed) Chairman Jerome Powell advocated for raising interest rates somewhat further by year-end. The policymaker also exemplified decelerating a car near the destination while saying, “It may make sense to move rates higher, at a more moderate pace.” Even so, the Fed’s Powell mentioned, “We are very far from our inflation target.” That said, most of the statements from Fed’s Powell were replicas of the last week’s FOMC statement and hence failed to impress the markets while weighing on the US Dollar.

On the contrary, comments from Federal Reserve Bank of Chicago President Austan Goolsbee weighed on US Treasury yields and the greenback as he said that the decision last week was a close call for him. The central bank has to “do more sniffing” before another rate hike, Fed’s Goolsbee added.

Elsewhere, the US-China tensions keep escalating after US President Joe Biden terms his Chinese counterpart “a dictator” while Beijing discards criticism of its behavior on the human rights front. Further, growing fears of the economic slowdown in China contrast with hopes of more stimulus to offer a whippy day to the markets.

At home, the RBA Minutes and policymakers appeared hawkish but failed to impress the market players earlier in the week, which in turn suggests that the AUD/USD bulls have finally left the battleground and the bears are the new rulers.

Amid these plays, Wall Street closed in the negative zone for the third consecutive day while the US Treasury bond yields remained intact after a volatile day. That said, the US Dollar Index (DXY) dropped for the fourth day in a row.

Looking ahead, a lack of major data/events can allow the AUD/USD to pare the previous day’s gains with eyes on major central bank decisions in the UK, Switzerland, Indonesia and Mexico. Should these policymakers appear hawkish, the fears of economic slowdown will escalate and allow the Aussie sellers to cheer the news. Additionally, Fed Chair Powell’s second round of testimony will also be important to watch for clear directions.

Despite the recent bounce off the 200-day Exponential Moving Average (EMA), around 0.6760, the AUD/USD bears remain hopeful unless witnessing a clear upside break of the previous support line stretched from May 31, close to 0.6960.

Technical Levels: Supports and Resistances

AUDUSD currently trading at 0.6799 at the time of writing. Pair opened at 0.6785 and is trading with a change of 0.21% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 0.667, 50 SMA 0.6679, 100 SMA @ 0.6723 and 200 SMA @ 0.6692.

The previous day high was 0.6855 while the previous day low was 0.6753. The daily 38.2% Fib levels comes at 0.6792, expected to provide support. Similarly, the daily 61.8% fib level is at 0.6816, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.674, 0.6696, 0.6638
• Pivot resistance is noted at 0.6842, 0.69, 0.6945

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