AUDUSD recently broke below the bottom of a longer-term ascending channel visible on its daily and 4-hour chart. On the shorter-term time frames, it can be seen that the pair is moving inside a descending channel formation and is bouncing off support.
The pair could be ready to test the channel resistance around the .7600 to .7650 area, which lines up with the Fib levels. Also, the 100 SMA lines up with the 50% Fib while the 200 SMA lines up with the 61.8% Fib, which is closer to the channel resistance.
The shorter-term MA is below the longer-term MA so the path of least resistance is to the downside and the selloff could resume at some point. Stochastic is already moving south so price could follow suit as sellers stay on top of price action. If any of the Fibs hold as resistance, AUDUSD could resume its drop to the previous lows at .7522 or lower.
In her Jackson Hole Symposium testimony, Fed Chairperson Yellen confirmed that the case for another rate hike has been stronger in the recent months. This has led to a strong dollar rally last week before profit-taking spurred a bounce earlier this week.
For now, traders are looking for more fundamental confirmation and the recent batch of core PCE price index, and personal spending and income data have merely met expectations. Dollar bulls will be watching the leading jobs indicators due this week to have more clues on how the top-tier US NFP report for release on Friday might turn out.
As for Australia, building permits data came in stronger than expected earlier today but the bigger movers could be the Australian retail sales and Chinese PMI readings due on Thursday. Signs of a property slowdown in China could weigh on trade activity and iron ore prices, which are correlated to the Aussie
By Kate Curtis from Trader’s Way