- AUDUSD extends downtrend to a more-than-a-year low
- A pause is likely, but negative trend could stay in play
- FOMC policy announcement due at 19:00 GMT
AUDUSD is caught in a relentless downtrend, plunging to a 14-month low of 0.6308 on Wednesday following the close below the long-term support trendline from October 2022.
As global markets brace for the Federal Reserve’s final policy meeting of the year, speculation mounts over whether buying the dip could play out in the coming sessions as the price is flirting with the 2023 bottom region of 0.6269-0.6300.
The RSI and the stochastic oscillator are signaling that the sell-off is overstretched, though the indicators have yet to bottom out in the oversold region. Hence, the bears may keep the upper hand for now. If the 0.6200 area allows more declines, the door could open for the 0.6100 round mark and then for the 0.5980 zone taken from April 2020.
On the upside, a break above the falling channel and the 20-day simple moving average (SMA) near 0.6440 could be a major challenge for the bulls who first need to overcome the 0.6388 resistance. If they succeed, the pair could advance toward the 0.6500-0.6530 zone, where the 50-day SMA is located. Slightly higher, a former constraining line at 0.6565 could clear the way toward the 200-day SMA at 0.6615.
It’s important to note that both the 50-day and 200-day SMAs have recently formed a death cross; a bearish signal that casts doubt on any immediate trend reversal.
In short, the bearish trend in AUDUSD is firmly in place, with the pair continuing to drift lower in the short term. While a recovery attempt could be possible near the 2023 low, selling interest could remain strong below the 0.6565 level. Hence, the outlook remains predominantly negative for now.Â
