AUD/USD retreats from last week’s tops, down at 0.7130s amid a mixed-market mood

• AUD/USD edges lower some 0.56%, as the Fed’s last monetary policy meeting looms.
• Risk sentiment dampens as the UK reported its first COVID-19 omicron-related death, increasing restrictions. 
• AUD/USD Technical outlook: Below 0.7200 bearish, otherwise could challenge an important confluence of technicals around 0.7300.

After closing the last week in the green, the AUD/USD slides during the New York session, trading at 0.7132 at the time of writing. As shown by European equities fluctuating between gainers and losers, financial markets are mixed. At the same time, US indices begin the day in the red, as the UK reported the first omicron-related death, as the spread of the new strain continues worldwide. Furthermore, some of the most important central banks would hold their last monetary policy meetings of the year, adding to the cautious tone of investors.

At the beginning of the trading week in the Asian session, the Australian dollar remained subdued, peaking at the daily high at 0.7174, then slumping as the market sentiment spurred a flow towards the safe-haven status of the greenback, weighing on the commodity-related currency.

In the meantime, the US Dollar Index advances 0.19%, sitting at 96.27, while US bond yields with the 10-year benchmark note are down four basis points (bps), at 1.448%, as the FOMC’s last monetary policy meeting looms.

An absent Australian economic docket left the Australian dollar at the mercy of dynamics surrounding the US dollar. Additionally, suppose the Federal Reserve decides to increase the speed in the bond taper in their last monetary policy meeting. In that case, it could trigger another leg-down in the pair ahead of the end of the year.

AUD/USD Price Forecast: Technical outlook

As the AUD/USD daily chart depicted, the 0.7186 barrier would still be difficult to overcome as the pair retreated towards the 0.7130s area since Wednesday of the last week. That said, the pair is mild-bearish, as long as the daily moving averages (DMAs) remain above the spot price, with a slightly-downslope direction. Nevertheless, upside risks remain unless the pair breaks below 0.7105. 

At press time, on the downside, the first support would be the August 20 cycle low at 0.7105. A break of that level would exert downward pressure on the AUD. The next support would be the YTD low at 0.6992. 

On the other hand, AUD bulls will need to reclaim 0.7200. In that event, the next resistance would be the confluence of the 50 and the 100-DMAs around the figure at 0.7300.