• AUD/USD is extending its five-day losing streak as China returns.
• Broad USD recovery and risk-aversion keep sellers alive
• The downside bias remains intact after a bear flag was confirmed last week.

AUD/USD is coming under fresh bearish pressures over the last hour, having failed to sustain the renewed upside, as risk-aversion remains at full steam in Asia.

The US dollar is picking up a fresh bid on a fresh risk-off wave, as investors remain on the edge amidst fresh Russia-Ukraine tensions, China’s services sector contraction and hopes for aggressive Fed rate hikes after Friday’s US Nonfarm Payrolls outpaced estimates.

Markets witnessed a brief reprieve on flat opening on the Chinese stock indices, which helped the aussie to recover ground to near 0.6380. Although the uptick was quickly faded, as Chinese stocks tracked their Asian counterparts lower while the S&P 500 futures lost 0.32% on the day.

Pre-US inflation release anxiety also keeps the dollar bulls supported amid holiday-thinned light trading. The US markets are partially closed on Monday, in observance of Columbus Day.

From a short-term technical perspective, the pair remains exposed to further downside risks after it confirmed a bear flag formation on the daily sticks. The pair closed last Thursday below the rising trendline support, then at 0.6421.

The 14-day Relative Strength Index (RSI) is inching towards the oversold territory, suggesting that there is more room for the downside.

A breach of the 0.6300 support could trigger a sharp sell-off towards 0.6000 – the psychological level. Ahead of that, the 0.6250 figure could come to buyers’ rescue.  

AUD/USD: Daily chart

On the flip side, bulls need to clear the intraday highs of 0.6380 in order to recapture the 0.6400 level.

Further up, the rising trendline support now turned resistance at 0.6445 will be a tough nut to crack for aussie bulls.

AUD/USD: Additional levels to consider