AUD/USD Price Analysis: Falling wedge breakdown calls for more downside

• AUD/USD’s path of least resistance appears to the downside.
• The US dollar rebound; weak Chinese inflation weigh on the aussie.
• Falling wedge breakdown confirmed on the aussie’s daily chart.

AUD/USD is consolidating the latest leg down to seven-month lows of 0.7409, as the bears take a breather, awaiting fresh trading impetus.

The aussie almost tested the 0.7400 mark after the Chinese inflation figures disappointed. The down move was also endorsed by a rebound in the US dollar alongside the Treasury yields amid risk reset.

The pair now looks forward to fresh covid updates and risk trends for fresh trading.

From a near-term technical perspective, the currency pair’s daily chart points to more losses, especially after the bears confirmed a downside break of the falling wedge formation on Thursday.

Therefore, a breach of the daily lows would call for a test of the 0.7400 level, below which the December low of 0.7338 could be probed.

The 14-day Relative Strength Index (RSI) sits just above the oversold region, currently at 31.06, suggesting that there is more room for the downside.

The selling momentum gained traction after the 21-Daily Moving Average (DMA) pierced through the 200-DMA from above, charting a bear cross earlier this week.

AUD/USD daily chart

To the upside, the AUD bulls need a daily close above wedge support-turned-resistance at 0.7472 in order to negate the near-term bearish momentum.

Thursday’s high at 0.7495 will then challenge the bulls’ commitments.

AUD/USD additional levels to watch