AUD/USD Analysis Report: A bearish reversal may begin if the major is established below the 200-EMA.

VOT Research Desk

After a higher-than-anticipated release of consumer inflation expectations in Tokyo, the AUDUSD pair is underperforming compared to other risk-perceived currencies.

In the early European session, the asset is clinging to the round-level support of 0.6400 and has diverged to a negative correlation with US Treasury rates. At the time of publication, the 10-year US Treasury rates were trading below 4.07%, repeatedly resetting the day’s low.

As market mood has improved, the US dollar index (DXY) has retreated to the day’s low of 110.17.

The asset has had a sharp decline on an hourly basis after failing to maintain above the horizontal resistance formed at the high point of October 27 at 0.6522. The 200-period Exponential Moving Average (EMA) for the major is at 0.6427. This move might make or break the market since a bearish reversal will be sparked by an establishment below the 200-EMA.

The negative momentum is active, as seen by the Relative Strength Index (RSI) (14) moving towards the bearish 20.00-40.00 zone.

If the asset falls below Monday’s low at 0.6406, which would push it toward October 31 low at 0.6368, the greenback bulls will still be in control. If the asset slips below the latter, it will be exploited to show more decline to the area of the November 3 low at 0.6272.

In contrast, a break over Tuesday’s high at 0.6551 will send the asset in the direction of round-level resistance at 0.6600 and the high from September 21 at about 0.6700.