FxWirePro: AUD/USD rejected at 21-EMA, poised for further downside

AUD/USD chart - Trading View 

AUD/USD was trading in an narrow range, as it consolidates previous session's weakness.

Aussie undermined by concerns over the rapid spread of the Delta coronavirus variant which raises concerns over recovery.

On the other side, the dollar held firm near four-month highs, after data showed U.S. producer prices posted their largest annual increase in more than a decade. 

Data printed overnight showed producer price index (PPI) for final demand increased 1.0% last month after rising 1.0% in June. 

In the 12 months through July, the PPI jumped 7.8%, a record high since the measure was introduced just over a decade ago.

Data suggested inflation pressures remain strong, stoking fears that the Federal Reserve to pull forward its timing on tapering of asset purchases as well as interest rate hikes.

Separately, data showed the number of Americans filing claims for unemployment benefits fell again last week, a further positive for the US dollar.

Strong USD and falling iron ore prices dent the AUD/USD pair. Dalian iron ore plunged more than 4% on Friday and are on track to log second weekly drop on falling demand.

Major bias for the pair is bearish. 21-EMA is stiff resistance (currently at 0.7380), capping any recovery attempts.

Price action has retraced brief break above 200H MA. Resumption of weakness will see some strong support at 110-week EMA at 0.7307. 

Break below 110-week EMA to see drag till 200-week MA at 0.7224. Bearish invalidation only above 21-EMA.