AUD/USD on Tuesday once again failed to break 0.8821, a key resistance level, on third consecutive day, thus repeated rejection from the same level shows the vulnerability of the pair.
At the moment of writing in Asian session Aussie Dollar is being traded at 0.8804 against the greenback. Immediate resistance is shown at 0.8821, 38.2% fib level ahead of very crucial hurdle around 0.8871 which is 50% fib level as well as confluence zone of 100 and 200 Moving Averages on four hours timeframe.
On downside, support is noted around 0.8758 ahead of 0.8751 that is also a confluence of moving averages on hourly timeframe. Commodity Channel Index (CCI) is in oversold territory on hourly and four hours timeframe which means a correction might be ended here and pair may resume downtrend in near future. Negative divergence may also be noted with MACD. Relative Strength Index (RSI) is however showing neutral readings.
AUD/USD is headed towards 50% fib level of entire move from 2008 to 2011. 50% retracement is sitting in around 0.8536. Reserve Bank of Australia (RBA) recently voiced concerns about overvalued Australian currency and hinted intervention in open market that in turn trigger a sharp sell-off in Aussie Dollar. The pair has also completed Head & Shoulder (H&S) price pattern which was obvious on daily chart. It is very likely that the ongoing downtrend may halt after price hits 50% fib level.
It is to be noted that the US Federal Reserve’s interest rate as well as asset purchase decision is due today in the US evening session. No change in interest rate is likely but pace of bonds buying may reduce by $10 billion according to median estimate of analysts. The central bank had already taper asset purchase program by $10 billion in December monetary policy meeting.
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