AUDUSD – recovery faces increased headwinds from initial Fibo resistance

Tuesday’s action, shaped in tight Doji candle, suggests that recovery leg from 0.6865 (June 30 low) starts to lose traction, following repeated failure at initial Fibo barrier at 0.6961 (23.6% retracement of 0.7271/0.6965) reinforced by falling 20DMA.

Overbought stochastic and south-turning RSI (currently at 42) on daily chart, warn of potential correction, if Fibo barrier at 0.6961 continues to cap.

Dips should be contained by broken 10DMA (0.6914) to keep near-term bias with bulls and prospects for acceleration towards 0.7000/20 pivots (psychological / Fibo 38.2%) and 0.7068 (50% retracement / 100DMA) in extension.

The notion is supported by softer tones from the US central bank on monetary policy, particularly on signals of weakening US labor sector, after disappointing June NFP data that almost fully sidelined expectations for Fed rate hike this month and dropped bets for a hike in September’s policy meeting.

On the other hand, the RBA kept hawkish stance that contributed to divergence of monetary policy views of two central banks and underpinned the Aussie dollar.

Conversely, any hawkish shift from the Fed may hurt near-term structure and risk retest of 200DMA (0.6868), key medium-term support, which keeps broader bulls (from Apr 2025) in play.

Res: 0.6961; 0.7000; 0.7020; 0.7068
Sup: 0.6914; 0.6868; 0.6833; 0.6766