AUD/USD Price Analysis: Refreshes session lows, further below 0.7400 mark

• AUD/USD witnessed a modest pullback on Monday from the vicinity of multi-week tops.
• Resurgent USD demand, a softer risk tone exerted pressure on the perceived riskier aussie.
• A mixed technical setup warrants some caution before placing aggressive directional bets.

The AUD/USD pair struggled to capitalize on its early modest gains to the 0.7435 region and witnessed an intraday turnaround from the vicinity of five-week tops touched on Friday. The corrective pullback extended through the early part of the European session and dragged the pair further below the 0.7400 round-figure mark.

The downfall was sponsored by a goodish pickup in the US dollar demand, bolstered by a fresh leg up in the US Treasury bond yields. This, along with a softer risk tone and disappointing Chinese GDP print, further benefitted the greenback's relative safe-haven status and contributed to driving flows away from the perceived riskier aussie.

Looking at the technical picture, the AUD/USD pair struggled to find acceptance or build on the momentum beyond 100-day SMA. This comes on the back of the formation of an indecisive Doji candlestick on Friday and suggests that the recent strong positive move from September monthly swing lows might have run out of steam.

The outlook is reinforced by the fact that technical indicators on the 1-hour chart have been gaining positive traction. That said, oscillators on daily/4-hour charts – though have lost some traction – are still holding in the bullish territory. This, in turn, warrants some caution for aggressive bearish traders.

Hence, it will be prudent to wait for a strong follow-through selling before confirming that the AUD/USD pair has topped out in the near term and positioning for any meaningful depreciating move. Hence, any subsequent downfall is more likely to find decent support near the lower boundary of a short-term ascending channel.

The latter is currently pegged near the 0.7370 region, which if broken decisively could accelerate the fall towards the 0.7320-15 strong horizontal resistance breakpoint. Some follow-through selling, leading to a subsequent weakness below the 0.7300 mark will set the stage for deeper losses and turn the AUD/USD pair vulnerable.

On the flip side, any meaningful move back above the 0.7400 mark might continue to confront stiff resistance near the 0.7435-40 region. A sustained strength beyond should push the AUD/USD pair back towards September monthly swing highs, around the 0.7475-80 region, before bulls aim to reclaim the key 0.7500 psychological mark.

AUD/USD daily chart

Technical levels to watch