Is The AUD/USD About To Drop?

Following Monday’s noticeable reversal in the bullish trend for US indices, risk-sensitive currencies such as the commodity dollars will be in focus now.

If the stock market selling continues today, then I would expect to see the likes of the AUD/USD and NZD/USD break lower and USD/CAD to push higher.

This is how the Nasdaq 100 chart looks:

Nasdaq futures

Source: TradingView.com and TradingCandles.com

If the above is a genuine reversal signal, then the AUD/USD looks juicy for the bears:

AUD/USD

Source: TradingView.com and TradingCandles.com

The AUD/USD created an inverted hammer on daily on Monday, tracking the reversal for major US indices. A few weeks ago, it had created a false break above its old high at 0.7032 and price has since struggled to go back above the 0.70 handle.

Given the above developments, I think a correction looks likely. I would be wrong if we close above 0.70 on the daily chart.

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