The AUD/USD pair has seen a decline for two consecutive days, currently trading around 0.7160 during Asian hours on Wednesday. A look at the daily chart indicates that the pair is moving in a rectangular pattern, which signals a period of consolidation—suggesting that neither side has enough strength to take charge of the market.
While the AUD/USD remains above the 50-day exponential moving average (EMA), which points to a somewhat positive short-term trend, it’s hovering just beneath a near-term resistance level established by the 9-day EMA.
The 14-day Relative Strength Index (RSI) is holding around the neutral mark of 50, implying a lack of clear momentum. A significant directional move might only surface if the pair manages to break free from this tight range of moving averages.
At present, the AUD/USD is testing a resistance point at the 9-day EMA, sitting at 0.7164. Should it surpass this level, we could see an increase in momentum. This upward strength might support the pair as it approaches the upper limit of the current rectangular formation at 0.7270, with a significant target at 0.7277, the highest recorded since last June on May 6th.
Conversely, if the pair moves downward, it might aim for the 50-day EMA at around 0.7120. Falling below this support could lead it to test the lower aspect of the rectangle around 0.7070. If selling pressure escalates and the pair drops beneath this consolidated zone, it could tumble down to roughly 0.6833, potentially revisiting the four-month low experienced on March 30th.
