AUD/USD fades bounce off 0.6720 support confluence amid bearish options market signals

AUD/USD clings to mild losses around 0.6730 as it reverses the previous day’s corrective bounce off the two-week low amid the mid-Asian session on Tuesday. In doing so, the Aussie pair fades recovery from the 200-DMA support of around 0.6720 amid bearish signals from the options market.

That said, the one-month Risk Reversal (RR) of the AUD/USD pair, a measure of the spread between call and put prices, dropped for the fourth consecutive day to -0.033 by the end of Monday’s North American trading session.

With this, the Aussie RR extends the previous week’s bearish bias, as portrayed by the weekly RR of -0.195, the biggest in three months, amid the market’s cautious mood and the broadly firmer US Dollar.

Also read: AUD/USD ignores firmer US Dollar to recover from two-week low above 0.6700 amid risk-on mood

Technically, AUD/USD retreats from a one-week-old descending resistance line, around 0.6750 by the press time, as the MACD indicator prints the first daily negative in two weeks. Adding strength to the downside bias is the steady RSI (14) line.

However, a convergence of the 200-DMA and 21-DMA, around 0.6720 by the press time, restricts the immediate downside of the AUD/USD pair, a break of which can drag the quote towards a two-month-old rising support line, close to 0.6690 at the latest.

Overall, AUD/USD appears stuck between the key trend lines while the DMA confluence tests the bears.

AUD/USD: Daily chart

Trend: Limited downside expected