AUD/USD trending lower into Fed Powell's testimony

• AUD/USD is consolidating below daily moving averages with sights on the 0.68 handle. 
• All eyes will turn to Federal Reserve Powell tonight.

The US Dollar continued to rise against most of the G10 but AUD was weakest in the G10. AUD/USD extending the recent decline from 0.6960 to 0.6921 for a three-week low. Pessimism over the AUD has increased of late while the RBA has scurried to cut rates twice at back-to-back monthly meetings in June and July. Also, the market views the AUD as a proxy for the lack of confidence in the Chinese economy and the trade war between the U.S. and China.

The day ahead

For the day ahead, Federal Reserve's chair, Powell, begins his semi-annual testimony to Congress at 10 am NY time where he will deliver a prepared statement and face many questions from members of the House Committee on Financial Services.  "Money markets are still fully priced for a 25bp cut in the federal funds rate at the end-July FOMC meeting," analysts at Westpac explained. "If the Fed is not inclined to act so soon, then this is the time for Powell to shift market expectations. Westpac recently changed its call from 2 Fed cuts in Sep and Dec to 2 cuts in Jul and Oct/Dec."

AUD/USD levels

Analysts at Commerzbank explained that last week, AUD/USD failed at its current July high at 0.7048 and dropped back towards the 0.6899 target.

"Short-term downside pressure should be maintained while the June and current July highs at .7022/48 cap. Above it sits the late April peak at .7069. Further up resistance can be spotted at the .7207 February high."