AUD/USD trims some daily losses, hovers around 0.7270 on an improved market sentiment

• The Aussie trims some losses as the market sentiment improves.
• US Republican Senator McConnell offered a short-term solution that would increase the debt ceiling until December.
• From a technical perspective, the AUD/USD is tilted to the downside.

After reaching a daily low at 0.7225, the AUD/USD pair trims some of its losses, stills down some 0.22%, is trading at 0.7275 during the New York session at the time of writing.

A dismal market sentiment struck the Asian and the European session. Surging energy prices, and worldwide higher yields, spurred a sell-off in the global equity markets. That mood carried on in the New York session until Senator Mitch McConnell, the leader of the Republicans, offered a short-term debt limit increase that would last through November.

The US stock equity markets reacted positively to the news, with the three major indices rising between 0.11% and 0.30%. Further, risk-sensitive currencies like the AUD, the NZD, and the CAD trimmed some of their earlier losses against the greenback.

The Australian economic docket will feature the AiG Performance of Services Index(Sep) on the macroeconomic front on Thursday. 

Concerning US economic data, the US Initial Jobless Claims for the week ending on October 1 is expected to increase by 350K. Also, New York’s Fed President John Williams will cross the wires.

AUD/USD Price Forecast: Technical outlook

The AUD/USD dipped to a daily low at 0.7225 but bounced off the lows and is near the week’s tops. The daily moving averages remain well above the spot price, suggesting that the downtrend bias stills.

For AUD/USD buyers to regain control, they need a daily close above the 50-day moving average (DMA), lying at 0.7306. In case of that outcome, it would expose key resistance levels. The first one would be 0.7350, followed by the 100-DMA at 0.7437, and then 0.7500.

On the other hand, for sellers to resume the downtrend, they need a daily close under 0.7300. Once that is achieved, the AUD/USD pair could fall towards 2021 lows around 0.7105, but it would find some hurdles on the way. The key support levels on the way down would be 0.7200 and 0.7150.

The Relative Strength Index (RSI) is at 48, edging towards lower readings, suggesting downward pressure remains.

KEY ADDITIONAL LEVELS TO WATCH