• AUD/USD off lows but struggles around 0.7000 amid dismal Aussie wage data.
• US dollar remains in a consolidative mode ahead of the Fed minutes.
• Bears test bulls’ commitments at critical 21 DMA, with Australian jobs next of note.

AUD/USD is resuming the downtrend seen so far this week, following Tuesday’s brief reprieve, as bears cheer the downbeat Australian Wage Price Index.

The miss on the Australian wage data suggests that the RBA could slow down its tightening path amid the first signs of inflation cooling off. Thursday’s employment data will, therefore, hold the key for the RBA’s future policy guidance.

Although the downside in the spot remains limited, courtesy of the hawkish rate hike by the RBNZ and a broad US dollar consolidation, as attention shifts towards the Fed July meeting minutes. The US dollar index is trading at 106.42, down 0.07% on the day.

From a short-term technical perspective, the pair is drawing temporary support from the upward-pointing 21-Daily Moving Average (DMA) at 0.6981.

A breach of the latter will bring the horizontal 100 DMA at 0.6966 in play. A sharp drop towards the mildly bullish 50 DMA at 0.6896 could be in the offing if bears take out the 100 DMA.

Therefore, it could be safe to say that the sell-off triggered following a rejection at a critical horizontal 200-Daily Moving Average (DMA) at 0.7120 may be facing exhaustion.

Buyers need to crack the daily high of 0.7070, above which is the 0.7100 round figure.

On the flip side, the immediate downside cap aligns at 0.7000, below which sellers will look to challenge the 0.6970 demand area, where the 21 and 100 DMAs hang around.

AUD/USD: Daily chart

However, with the 14-day Relative Strength Index (RSI) still holding above the midline, the ‘buy the dips’ trade could be seen in the aussie.

Bulls need to crack the daily highs of 0.7033 in order to test the 0.7050 psychological level.

The 21 and 100 DMA bullish crossover continues to keep the 200 DMA at 0.7120 on buyers’ radars.

AUD/USD: Additional levels to consider