AUD/USD: Flat after the slump, await Fed Chair Powel’s comments

• The AUD/USD pair began the Thursday’s Asian trading around 0.7100.
• The pair slumped to a fortnight low during the previous day on comments from the RBA Governor and the US President.
• Upcoming speech from the Fed Chair will become crucial catalyst for the pair.

The Australian Dollar opened almost flat around 0.7100 against the USD during early Asian trading session on Thursday. The AUD/USD pair slumped to the fortnight low of 0.7102 by the end of Wednesday as overall strength of the US Dollar and RBA Governor’s statements disappointed Aussie buyers. Next in the traders’ radar will be Fed Chairman Jerome Powell’s speech.

The AUD/USD pair initially lost grounds after the Reserve Bank of Australia (RBA) Governor Philip Lowe appeared for a speech at the National Press Club in Sydney. Lowe examined increased downside risk to the economy and gave even probabilities to the next rate move. With this, optimists were hurt at the Wednesday start.

Analysts at the Macquarie Bank noted “Lowe explicitly shifted to a neutral bias … brings the Bank's thinking in line with our own central scenario for the cash rate outlook (i.e. no change by end 2020 at least).”

The downside pressure for the AUD/USD pair increased after the US Dollar registered across the board strength on the President Donald Trump’s State of the Union (SOTU) speech. Adding to the sentiment was the US monthly trade balance figure.

Donald Trump sound optimistic about the US and China trade deal during his SOTU speech whereas the December month trade balance rose past -54.0B market consensus to -49.3B.

Looking forward, the Federal Reserve Chairman Jerome Powell’s speech at a virtual town hall meeting for teachers can offer fresh impulse to the pair traders. Investors are looking for clues to confirm whether the Fed still favors the “patience” as far as rate hike is concerned or not. 

AUD/USD Technical Analysis

Break of short-term ascending supportline signals the AUD/USD pair’s weakness that can fetch it to 0.7070 support level. If the pair refrains to respect the 0.7070 rest-point, the 0.7015 and the 0.6980 may gain sellers’ attention.

On the upside, 0.7160 acts as immediate resistance for the pair before highlighting the 0.7200 level. Should prices rally beyond 0.7200, the 0.7260 and the recent high around 0.7295 can be targeted by the bulls.