FX

AUD/USD slides to fresh monthly lows on broad US dollar strength, targets 0.7200

  • AUD/USD prints a fresh three-week low at 0.7262.
  • Downbeat market sentiment boosts the demand for US dollars.
  • AUD/USD awaits the FOMC meeting to resume its direction.

During the European session, the AUD/USD reached a peak of 0.7321. However, as market sentiment deteriorated and American traders got to their desks, the AUD/USD dipped below 0.7300, pushing the pair to a three-week low at 0.7262. The AUD/USD is trading at 0.7284 at the time of writing, down 0.05% on the day.

US stocks fall while the greenback rises, underpinned by higher bond yields

In the New York session, US stock indexes are posting losses between 0.32% and 1.21%. The US Dollar Index is on the right foot, rising 0.41% on the day, currently at 93.24, underpinned by higher yields. The 10-year benchmark rate is at 1.368%, up to three basis points.

In the US economic docket, the Consumer Sentiment of the University of Michigan was released. The sentiment improved to 71.0 in September but remained below the 72.2 expected. The Delta strain has dampened the consumer sentiment, lowering the economic forecasts for the third quarter as economic activity slowed down.

The week ahead: FOMC Meeting and RBA Minutes

The Federal Open Market Committee will hold its September meeting. A lousy employment report and moderate inflationary pressures could delay bond taper announcement until November’s meeting. Contrarily, rising PPI and a stellar Retail Sales report could potentially prompt the Fed to take action at the following week’s meeting.  

Meanwhile, the Reserve Bank of Australia will reveal the minutes of their last meeting on September 21.

AUD/USD Price Forecast: Technical outlook

The AUD/USD pair is trading well below its main daily moving averages in the daily chart, suggesting that sellers are in charge. The first support level would be 0.7200. In case of a break below the latter, the next demand area would be the 2021 low at 0.7100. A breach of that level could motivate sellers to push the price towards the psychological 0.7000.

On the other hand, buyers would need to push the price  towards the 50-day moving average at 0.7342 to reclaim control.

The Relative Strength Index is at 41.18, heading lower, supporting the bearish bias.

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