FxWirePro: AUD/USD depressed below 21-EMA, liquidity concerns persist despite central banks' efforts

Chart - Courtesy Trading View 

Spot Analysis: 

AUD/USD was trading 0.24% lower on the day at 0.6682 at around 07:20 GMT

Previous Week's High/ Low: 0.6724/ 0.6589

Previous Session's High/ Low: 0.6724/ 0.6643

Fundamental Overview:

The Australian dollar struggling for direction as investors continued to assess risks to the global banking and financial system despite central banks' efforts.

Safe haven dollar on the back foot amid a rebound in Treasury yields. Volatility subsides but fears remain among traders even as major central banks seek to reassure markets.

Over the weekend, the Federal Reserve, European Central Bank, Bank of England, Swiss National Bank, Bank of Canada and Bank of Japan announced joint action to enhance market liquidity.

The US Dollar Index (DXY) muted around 103.80 as markets prepare for action ahead of the interest rate policy by the Federal Reserve (Fed).

On the other side, the People's Bank of China (PBoC) kept its benchmark rate unchanged as they had already cut the Reserve Requirement Ratio (RRR) by 25 bps on Friday.

Focus now on the FOMC meeting on Wednesday. Analysts expect the Fed to hike rates further by 25 bps to tackle sticky inflationary pressures.

Markets will also pay keen attention to the forward guidance and it seems highly unlikely Fed chair Jerome Powell would undermine the potential banking meltdown.

Technical Analysis:

- AUD/USD finds stiff resistance at 21-EMA, break above required for further gains

- 5-DMA is biased higher and is offering immediate support 

- MACD confirms bullish crossover on signal line

- Stochs are biased higher and volatility is high

- RSI is flat and remains below the  mark, Chikou span is neutral

Major Support and Resistance Levels:

Support - 0.6667 (5-DMA), Resistance - 0.6715 (21-EMA)

Summary: AUD/USD struggles for direction at 21-EMA resistance. Major trend in the pair is still bearish. Break above 21-EMA will find major resistance at 200-DMA. Decisive break above 200-DMA will change near-term dynamics.