AUD/USD Price Analysis: Up little around 0.7240 area

AUD/USD Price Analysis: Up little around 0.7240 area

The AUD/USD pair struggled to capitalize on its modest intraday gains and has now retreated around 25-30 pips from daily swing highs. The pair was last seen hovering around the 0.7240 region, still up over 0.15% during the first half of the European session.

The risk-on impulse in the markets undermined demand for the safe-haven US dollar and was seen as a key factor that provided a modest lift to the perceived riskier aussie. However, expectations for an imminent Fed taper announcement acted as a tailwind for the greenback and capped gains for the AUD/USD pair, rather prompted some selling at higher levels.

Looking at the technical picture, the recent pullback from the highest level since mid-July touched earlier this month has been along a downward sloping channel. This points to a short-term bearish trend and supports prospects for further losses. Investors, however, seemed reluctant to place aggressive bets ahead of the crucial FOMC policy decision.

Meanwhile, technical indicators on the daily chart are holding deep in the bearish territory and have again started gaining negative traction on hourly charts. Hence, a subsequent slide below the 0.7220 area, or monthly swing lows, towards challenging the trend-channel support near the 0.7200-0.7195 region, remains a distinct possibility.

Some follow-through selling will be seen as a fresh trigger for bearish traders and turn the AUD/USD pair vulnerable. The next relevant support is pegged near the 0.7130 level, below which the downward trajectory could further get extended towards challenge YTD lows, around the 0.7100 round-figure mark touched on August 20.

On the flip side, the overnight swing highs, around the 0.7280 zone, now seems to act as immediate resistance. This is closely followed by the top boundary of the mentioned channel, currently around the 0.7300 mark. A convincing breakthrough will negate the negative bias and trigger some near-term short-covering move towards the 0.7345-50 region.

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