AUD/USD sideways around 0.7840 supported by a weaker US dollar despite risk aversion

• AUD/USD post modest gains on Tuesday even as US stocks drop sharply.
• US Dollar remains with a bearish bias, DXY trades at lowest since late February.

The AUD/USD pair is moving sideways on Tuesday, hovering around 0.7840. The correction from the highest since late February at 0.7892 found support at the 0.7820 zone. The decline in equity prices in Wall Street, so far, did not affect the aussie.

The Dow Jones is falling by 1.32% and the Nasdaq slide by 0.45% after trimming losses. European markets dropped more than 1% but ended off lows. The risk aversion environment did not boost the demand for Treasuries. The 10-year yield rose to 1.62%, the highest in a week.

The US dollar is posting mixed results. Usually, it benefits from higher yields and risk aversion, but that is not the case on Tuesday. It is down even versus some emerging market currencies.

From a technical perspective, in the short-term AUD/USD is moving sideways. A break under 0.7820 would clear the way for a test of 0.7805. The area between 0.7800 and 0.7810 is a strong barrier that if broken would weaken the outlook of the aussie. On the upside, the immediate resistance is seen at 0.7855/60 and above the weekly top at 0.7890.

Technical levels