AUDUSD has been trending lower recently and is now moving inside a descending channel on its 4-hour chart. 

Price just bounced off support and is looking to pull back to the resistance at the .7450 minor psychological level.

This is in line with the 50% Fib and a broken support zone. A larger pullback could last until the channel resistance closer to the 61.8% retracement level and the 100 SMA dynamic resistance. This short-term MA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside.

Stochastic is also heading down from the overbought zone to indicate that selling pressure is about to pick up. If any of the nearby resistance levels hold, price could make its way back down to the swing low at .7325 or onto the channel support closer to the .7300 handle.

Economic reports from China and Australia have been mostly disappointing last week and the RBA statement did acknowledge these signs of a slowdown. Earlier today, China reported a lower than expected industrial production reading of 6.5% year-over-year versus the projected 7.0% gain and the earlier 7.6% increase. Fixed asset investment and retail sales also slowed significantly.

Over in the US, the dollar was bogged down by weaker than expected CPI and retail sales figures. Headline CPI came in at 0.2% versus 0.3% while core CPI printed a meager 0.1% uptick. Headline retail sales increased 0.4% versus 0.6% while core retail sales advanced by 0.3% versus 0.5% to signal that the consumer sector is not that strong yet. 

By Kate Curtis from  Trader’s Way