- AUD/USD struggles to gain and hovers around 0.6555, up 0.16% for the day.
- The pair trades below the 50- and 100-hour EMAs; the Relative Strength Index (RSI) stands below 50.
- The key resistance level for AUD/USD will emerge at 0.6600; 0.6500 acts as an initial support level.
The AUD/USD pair remains on the defensive around 0.6555 in the Asian trading hours on Wednesday. The prevalent US Dollar buying bias is supported by the headlines surrounding the US-China relationship.
That said, the US government intends to target only Chinese companies that generate more than 50% of their revenue from quantum computation and artificial intelligence (AI). However, US President Joe Biden is expected to issue an executive order this week about the restriction, according to Bloomberg. The positive development between the world’s two largest economies might benefit the China-proxy Australian Dollar (AUD) and act as a headwind for the AUD/USD pair.
According to the four-hour chart, AUD/USD trades below the 50- and 100-hour Exponential Moving Averages (EMAs), highlighting that the path of least resistance for the pair is to the downside.
The key resistance level for AUD/USD will emerge at 0.6600, indicating a confluence of the upper boundary of the Bollinger Band, a high of August 4, and a 50-hour EMA. A break above the latter will see the next upside stop at 0.6625 (low of July 28) en route to 0.6650 (100-hour EMA). The additional upside filter is located at 0.6700 (high of July 31, a round figure).
On the flip side, 0.6500 acts as an initial support level for the pair, portraying the lower limit of the Bollinger Band, a low of August 3, and a psychological round mark. Any intraday pullback below the latter would expose the next contention level at 0.6460 (low of May 31) Further south, the next stop of the AUD/USD is located at 0.6400 (the confluence of a psychological round figure and the low of November 2022).
It’s worth noting that the Relative Strength Index (RSI) stands below 50, challenging the pair’s immediate downside for the time being.