AUD/USD traded lower during the European morning Thursday, breaking below the support (now turned into resistance) hurdle of 0.7370. Since the 14th of June, the pair has been trading within a sideways range between the 0.7320 support zone and the 0.7480 hurdle and thus, we would consider the near-term outlook to be neutral for now. That said, as far as the bigger picture is concerned, AUD/USD remains below the downtrend line taken from the peak of the 16th of February, something that keeps the broader downtrend intact.
For now, we believe that the break below 0.7370 may have opened the way towards the lower end of the near-term range, at 0.7320. Nevertheless, a decisive break and a close below that bound is needed to signal the resumption of the prevailing longer-term downtrend. Such a dip would confirm a forthcoming lower low on the daily chart and could set the stage for bearish extensions towards the 0.7250 zone, defined by the inside swing peaks of the 29th and 30th of December 2016.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50 and looks to be heading towards its 30 line. The MACD stands below both its zero and trigger lines, pointing down as well. These indicators detect negative momentum and corroborate our view that the pair could continue drifting south for a while more, at least towards the lower bound of the aforementioned near-term range.
On the upside, a move back above 0.7370 could trigger a recovery towards the 0.7410 barrier, which if broken, could open the path towards our next resistance of 0.7445. If that level fails to stop the rate from rising further, then we may see a test near the upper end of the range, at around 0.7480.
Having said all these though, even in case of such a recovery, we would still see a decent chance for the bears to take advantage of the range’s upper bound. After all, the pair would still be trading below the downtrend line drawn from the peak of the 16th of February. We would like to see a clear break above 0.7515 before we start examining whether the near-term outlook has turned bullish.