AUD/USD struggles on risk-aversion

The AUD/USD pair is up throughout the week by 1.34%, despite falling on Friday. Market sentiment fluctuates negatively in the last hour, dragging the AUD/USD lower.

The Australian dollar is struggling at the 20-day moving average (DMA) and is losing the battle as the AUD/USD looks forward to resuming the prevailing downtrend, as the 50-DMA crosses below the 100-DMA, further confirming the bias. At 0.7030, the AUD/USD reflects the greenback’s strength as sentiment turned sour.

Earlier in the day, Wall Street opened higher after receiving a push by the positive mood carried on from the Asian and European sessions. investors cheered on the People’s Bank of China rate cut to the 5-year Loan Prime Rate from 4.60% to 4.45%, a move that was welcomed signaling that the Chinese authorities will keep supporting the economy, despite zero-tolerance Covid-19 restrictions. Nevertheless, the mood shifted in the last hour.

During the week, the Australian dollar benefited from positive employment data, despite that the Wage Price Index (WPI) rose lower than estimations. However, the Full-time employment crushed expectations, and the Unemployment Rate down ticked, lifting the AUD/USD above 0.7070s, weekly highs.

On Friday, the market is telling a different story, as risk-aversion, which kicked in since Thursday’s though was ignored by FX market players, is taking a toll on the AUD/USD, sending the major tumbling below the 20-DMA and threatening to open the door for a move towards 0.7000.

On the US front, an absent economic docket, which witnessed earlier in the week a parade of Fed speakers, is not doing much for the greenback, which is strengthening in the session as reflected by the US Dollar Index up 0.26%, back above the 103.000 mark.

Technically; the AUD/USD is still downward biased, despite Thursday’s rally, which lifted the pair from below 0.7000s towards weekly highs. A Friday’s daily close below the 20-DMA at 0.7039 would expose the major to selling pressure.

The major’s path of least resistance continues downwards. The AUD/USD first support would be 0.7000. Break below would expose the 0.6900 mark, followed by the bottom band of the Bollinger band’s indicator at 0.6850 and then the YTD low at 0.6828.