FxWirePro: AUD/USD drops further as risk-off mood soars, US CPI in focus

Chart - Courtesy Trading View 

AUD/USD was trading 0.47% lower on the day at 0.6335 at around 05:00 GMT. The pair is extending weakness for the fifth straight session, outlook remains bearish.

Risk-off amid escalating geopolitical tensions between Japan and North Korea keep Aussie depressed. Price action has refreshed 2 and 1/2 year lows, scope for further downside.

On the other side, firmer US NFP data has strengthened the case of a 75 bps rate hike by the Fed, keeping the dollar buoyed.

Data released by the US Bureau of Labor Statistics on Firday showed the US economy generated fresh 263k jobs in September, higher than the projections of 250k. 

The Unemployment Rate scaled down to 3.5%, bolstering the case of a fourth consecutive 75 basis point (bps) rate hike by the Federal Reserve.

Major focus this week will be on the US Consumer Price Index (CPI) data, which is due on Thursday. Markets expect the headline inflation to print at 8.1%, lower than the prior release of 8.3%. 

Technical Analysis:

- GMMA indicator shows major and minor trend are strongly bearish

- Price action is below major moving averages which are trending lower

- Momentum is bearish, volatility is high and rising, Chikou span is biased lower

- MACD and ADX support downside in the pair

Major Support and Resistance Levels:

Major Support: 0.5980 (April 2020 low), Major Resistance: 0.6419 (5-DMA)

Summary: AUD/USD poised to extend weakness. Scope for test of April 2020 lows at 0.5980. Near-term trend change only above 21-EMA.