AUDUSD has been trending lower and moving inside a descending channel on its 1-hour time frame. Price bounced off the resistance and is setting its sights on the channel support around the .7650 minor psychological level.
The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the upside. However, the gap has narrowed enough to show that a downward crossover is about to take place, drawing more sellers in.
Stochastic, on the other hand, is signaling weakening selling pressure as the oscillator has reached oversold areas and is turning back up. In that case, support might still hold and lead to a bounce back to the channel resistance.
There were no reports from Australia last Friday and none are due today so market sentiment could push the commodity currency around. Meanwhile, the dollar saw mostly stronger than expected industrial production and consumer sentiment data last week.
Fears of a trade war are still in play and have been positive for the safe-haven dollar while weighing on the higher-yielding Aussie. The FOMC statement is also coming up this week and traders could keep pricing in expectations for an interest rate hike.
By Kate Curtis from Trader’s Way