AUD/USD: Offered after rejection at 50-hour MA, focus on RBA's Lowe speech

• AUD/USD turns red after failing to take out the 50-hour MA at 0.6779. 
• Aussie may suffer deeper losses if RBA's Lowe reinforces dovish expectations. 

AUD/USD has dropped into the red, having faced rejection at the 50-hour moving average line and could suffer a deeper drop if the Reserve Bank of Australia's (RBA) governor Lowe reinforces the market expectation of a 25 basis point rate cut on Oct. 1.

The currency pair is currently trading at session lows near 0.6765, representing 0.10% losses on the day. The pair had picked up a bid in the early Asian trading hours on comments by the US Treasury Secretary Steve Mnuchin, confirming the Chinese Vice Premier’s trade visit to the US in the next week

The upside, however, was capped by the 50-hour moving average near 0.6779. Therefore, a break above that average is needed invite stronger buying pressure and yield a notable bounce.

That, however, may not happen or could be short-lived if RBA's Lowe talks dovish. The central bank chief is scheduled to speak at 09:55 GMT.

RBA expected to cut rates on Oct. 1

Expectations for the RBA to cut the official interest rate to 0.75 percent on Oct. 1 surged following last week's worse than expected unemployment rate.

The ASX 30 day cash rates futures contracts are currently indicating a more than 70% chance of an RBA rate cut next week.

The AUD will likely rise well above the 50-hour MA if RBA's Lowe pushes back on expectations of an October rate cut. The currency pair, however, could drop below 0.67 if Lowe talks dovish, further boosting the probability of a 25 basis point rate cut on Oct. 1.

Technical levels