AUD/USD to fall towards 0.7400 on US dollar strength and dismal mood

• The market mood is downbeat, courtesy of high global yields, Russia-Ukraine’s woes, and China’s coronavirus outbreak.
• The Australian dollar is falling due to its status as a risk-sensitive currency amid an absent economic docket.
• AUD/USD Price Forecast: Remains bullish, but price action and RSI support the scenario of printing a leg-down before resuming the uptrend.

The Australian dollar begins the week on the wrong foot, extending its losses to four consecutive days amidst a risk-off market sentiment. The weakening of the Aussie is courtesy of rising worldwide yields, as global central banks look forward to tackling inflation amid a geopolitical crisis between Ukraine-Russia, which has prompted elevated energy prices. At the time of writing, the AUD/USD is trading at 0.7426.

Worldwide stocks fall as global yields rise; China reported more than 25K Covid-19 asymptomatic cases

Global equities remained on the back foot overnight, while US stocks further confirmed the dismal mood, trading with losses. The 10-year US Treasury yield is rising three basis points, and at one time during the session, pierced March 2019 swing high at 2.77%, underpinning the greenback, as the US Dollar Index gains 0.13%, currently at 99.969.

Aside from this, the crisis between Ukraine-Russia, signals the continuation of hostilities, as peace talks faltered to provide any fresh, positive impetus. Ukrainian President Volodymir Zelenskyy said that they should not lose the possibility of a diplomatic solution to the war. At the same time, Minister Stefanishyna expects Ukraine to be given EU candidate country status in June while emphasizing that Ukraine would move fast in its application to join the EU.

Meanwhile, the US, UK, Germany, and Slovakia will provide additional military equipment to Ukraine’s forces, as a diplomatic ending seems far to be achieved.

On the Russia front, President Putin is believed to have set himself four weeks to achieve some “sort of” victory in Ukraine before the big Russian victory day on May 9.

China’s Covid-19 outbreak in the regions of Shanghai and Guangzhou is another factor that dampened the market sentiment. Shanghai reported 25,173 new asymptomatic cases on April 10, contrary to only 914 symptomatic ones.

An absent Australian economic docket left the pair leaning on US economic data and the market mood. On the US front, Fed speakers led by Regional Fed Presidents Bostic, Evans, and Governor Bowman, will cross wires.

AUD/USD Price Forecast: Technical outlook

The AUD/USD retreated under March 7 daily high at 0.7441, extending its fall from around 0.7600. The Relative Strength Index (RSI) at 50.5, due to its slope, seems poised to drop further. However, it’s worth noting that the 50-day moving average (DMA) just crossed over the 200-DMA, each lying at 0.7309 and 0.7295, respectively, which means that the AUD/USD fall is a dip that would resume the uptrend later.

That said, the AUD/USD first support would be 0.7400. A breach of the latter would expose March 21 at 0.7373, followed by the 50-DMA at 0.7309.