AUD/USD: Oversold conditions warrant caution amid risk-aversion

• AUD/USD looks to recapture 0.7150, as bears remain relentless.
• Risk-off mood picks up pace, adds to the US dollar’s strength.
• Oversold conditions point to a rebound in the offing.

AUD/USD is languishing in nine-month lows, extending the sell-off below the 0.7200 level, as the buying interest around the safe-haven US dollar remains unabated amid intensifying risk-off mood in Europe.

Investors fret over the economic impact of the continued spread of the Delta covid variant globally, with the major Asian economies back under strict lockdown measures.

Meanwhile, Fed’s tapering speculation gained traction after the FOMC minutes showed that the officials discussed tapering plans in their July monetary policy review meeting. The hawkish Fed expectations have further fuelled the risk-aversion wave.

Markets continue to remain driven by the US dollar’s price action and risk-off flows amid a lack of significant US economic data. The aussie traders have also shrugged off the upbeat Australian jobs data, with the unemployment unexpectedly dropping to 4.6% in July.

AUD/USD technical outlook

The pair is fast approaching the next relevant support at 0.7150, below which the 0.7100 round number could be targeted. However, with the 14-day Relative Strength Index hovering within the oversold territory, a rebound could be in the offing any time soon. The road to recovery could meet initial demand at 0.7200, above which the daily highs of 0.7250 will be on the buyers’ radar.

AUD/USD daily chart

AUD/USD additional levels to consider