AUD/USD stands on slippery grounds as it drop to the fresh low since April 2020, around 0.6320 heading into Monday’s European session. In doing so, the Aussie pair justifies its risk-barometer status while leading the G10 currency pairs towards the south.

Elsewhere, China’s return to the market after a week-long holiday fails to renew the risk appetite. That said, the latest Sino-American tussles over Taiwan and risk-negative headlines from North Korea also weigh on the sentiment, as well as the AUD/USD prices.

From a technical perspective, the AUD/USD pair confirms a fresh bearish breakdown through a nearly two-week-old trading range and seems vulnerable to slide further. That said, RSI (14) on the daily chart is on the verge of breaking into oversold territory. This, in turn, suggests that bearish traders could take a brief pause near the 0.6300 round-figure mark before positioning for any further downfall. The said handle should act as a pivotal point, which if broken decisively will set the stage for an extension of the two-month-old downward trajectory.

On the flip side, the previous YTD low, around the 0.6365 region, now seems to act as an immediate hurdle. Any subsequent move up could be seen as a selling opportunity and remain capped near the 0.6400 round figure, or the trading range support breakpoint. That said, a sustained strength beyond could trigger a short-covering rally and allow the AUD/USD pair to reclaim the 0.6500 psychological mark. Spot prices could eventually climb to the 0.6540-0.6550 supply zone, which remains a tough nut to crack for bulls.

Trading AUDUSD on a Temporary Oversold Condition above 0.6300

Oct 10 2022