AUD/USD trades at new 21-month lows near 0.7230

• Broad-based USD strength drags AUD/USD below mid-72s.
• Copper futures are down nearly 2% on the day.
• Consumer Confidence Index and Wage Price Index from Australia will be watched next.

After spending the majority of the day moving sideways in a relatively tight range above mid-0.72s, the AUD/USD pair reversed its course in the last couple of hours and fell to its lowest level since January 2017 at 0.7224. As of writing, the pair was trading at 0.7235, losing 0.45% on the day.

Following a quiet European session, the US Dollar Index gained traction in the second half of the day amid a lack of significant fundamental catalysts or macroeconomic data releases that could force the greenback to make a deep correction. Following an upsurge to a new 2018 top at 96.79, the US Dollar Index went into a consolidation phase and was last seen at 96.70, where it was up 0.32% on a daily basis.

On the other hand, the commodity-sensitive aussie seems to be suffering additional losses on the dismal performance of copper futures. After finding resistance near 2.8 last week, copper futures turned south and is now approaching the 2018 lows that it set in mid-July at 2.670. At the moment, HGU8, copper September 2018 futures, is at 2.686, losing 1.65% on the day.

In the early trading hours of the Asian session on Wednesday, Westpac is going to publish its Consumer Confidence Index in Australia ahead of the Wage Price Index, which is expected to tick up to 0.6% in the second quarter from 0.5% in the first quarter.

Technical outlook

The RSI indicator on the daily chart dropped to 30 today, suggesting that the pair could make a technical correction before extending its losses. Supports could be seen at 0.7225 (daily low), 0.7160 (Dec. 23, 2016, low) and 0.7100 (psychological level). On the upside, resistances align at 0.7300 (psychological level/Aug. 12 high), 0.7375 (20-DMA) and 0.7450 (Aug. 9 high).