AUDUSD has been underperforming in the past two trading days, breaking back below the key 0.7300 level. When looking at the bigger picture the pair has been holding in ascending movement since July 24.
On the 4-hour chart, prices rebounded off the 0.7220 support level but failed to jump above the 20-period simple moving average (SMA). Based on technical indicators, momentum is too weak to provide a sustained move higher. The RSI is below 50 and the MACD is moving horizontally near the trigger line.
If price action remains inside the Ichimoku cloud, there is scope to test the 0.7300 handle again. Rising above it would see prices retesting the 40-period SMA at 0.7325 and from there, a resumption of the uptrend would follow, hitting the 25-month high of 0.7413.
On the other hand, on a break of the lower surface of the cloud, the focus could shift to the 0.7220 support, which if breached, would increase downside pressure and bring about a reversal of the trend. From here, AUDUSD would be on a path towards the diagonal line around 0.7185.
Overall, the pair has been in a descending movement and near-term weakness is expected to remain if price action take place in the lower end of the cloud.
