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This pair is moving sideways these days, and price is back to testing the range support.

Will it hold or break this time?

Before moving on, ICYMI, today’s Asia-London session watchlist checked out GBP/USD for a possible pullback after its sharp break lower. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. Senate Republicans block debt limit hike, gov’t shutdown looms

New Zealand reported highest daily COVID-19 case count in a month

Evergrande to offload $1.5 billion stake to Chinese state firm

Fumio Kishida wins runoff elections to be next Japanese PM

Fitch downgrades Evergrande and subsidiaries

German import prices up 1.4% vs. projected 0.8% uptick

Spanish flash CPI rose from 3.3% to 4.0% y/y vs. 3.5% forecast

Swiss Credit Suisse economic expectations index up from -7.8 to +25.7

Upcoming Potential Catalysts on the Economic Calendar:

U.S. pending home sales at 2:00 pm GMT
EIA crude oil inventories at 2:30 pm GMT
ECB head Lagarde, BOE Governor Bailey, Fed head Powell & BOJ Governor Kuroda to participate in “Policy Panel” discussion held by ECB at 3:45 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: AUD/USD

AUD/USD 1-hour Forex Chart
AUD/USD 1-hour Forex Chart

Bounce or break?

AUD/USD is still hanging around the bottom of its short-term range, still deciding where to go next.

If support holds, the pair could bounce back to the top of the range around .7310.

On the other hand, a break below support could set off a drop that’s the same height as the rectangle pattern, which spans 85 pips.

Technical indicators are favoring a bounce, with the 100 SMA above the 200 SMA and Stochastic starting to head north.

Then again, price already fell below the dynamic inflection points at the moving averages, so these could hold as resistance moving forward.

Keep in mind that risk-off flows have been in play recently, as the focus seems to be shifting back to Evergrande concerns.

A lot could still happen in the next few hours, especially with top central bankers like Lagarde, Bailey, Kuroda and Powell set to participate in a “Policy Panel” discussion hosted by the ECB.

Also, China is due to release its official manufacturing and non-manufacturing PMIs in the next session, so Aussie traders might be eager to price in expectations.