AUD/USD dives to over one-month low, bears now await break below 0.7300 mark

AUD/USD witnessed heavy selling for the second straight day and dived to a fresh multi-week low.
Weaker outlook for iron ore demand, the risk-off mood weighed on the resources-linked aussie.
Bets for aggressive Fed rate hikes boosted the USD and contributed to the intraday selling bias.
Break through ascending trend-line/50-DMA confluence has set the stage for a further downfall.

Haresh Menghani FXStreet

The AUD/USD pair continued losing ground through the early European session and dropped to a fresh multi-week low, closer to the 0.7300 mark in the last hour.

Concerns that China's aim to cut its steel output in 2022 could significantly dent the iron ore demand turned out to be a key factor that weighed on the resources-linked aussie. This, along with some follow-through US dollar buying, exerted heavy downward pressure on the AUD/USD pair for the second successive day on Friday.

The USD made a solid comeback from the weekly low touched on Thursday after Fed Chair Jerome Powell reinforced expectations for a faster policy tightening by the Fed. Powell said that a 50 bps interest rate hike will be on the table at the upcoming FOMC policy meeting on May 3-4 and also hinted at a series of rate increases this year.

The markets were quick to react and have started pricing in three straight 50 bps rate hikes, which, in turn, pushed the rate-sensitive 5-year US government bond above 3% for the first time since 2018. The selloff in the US fixed income markets continued on Friday, which, along with the risk-off impulse, underpinned the safe-haven buck.

The downward trajectory took along some short-term trading stops placed near the 50-day SMA, around the 0.7355 region, which coincided with an ascending trend-line extending from the YTD low. This, in turn, could be seen as a fresh trigger for bearish traders and supports prospects for an extension of a near three-week-old downtrend.

That said, it will be prudent to wait for sustained break below the 100-day SMA support, around the 0.7300 round-figure mark, before positioning for any further decline. Traders now look forward to the release of the flash US PMIs, which, along with the US bond yields, will influence the USD and provide a fresh impetus to the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price	0.7308
Today Daily Change	-0.0079
Today Daily Change %	-1.07
Today daily open	0.7387

Trends
Daily SMA20	0.7463
Daily SMA50	0.7354
Daily SMA100	0.726
Daily SMA200	0.7295

Levels
Previous Daily High	0.7458
Previous Daily Low	0.7364
Previous Weekly High	0.7494
Previous Weekly Low	0.739
Previous Monthly High	0.7541
Previous Monthly Low	0.7165
Daily Fibonacci 38.2%	0.74
Daily Fibonacci 61.8%	0.7422
Daily Pivot Point S1	0.7348
Daily Pivot Point S2	0.7309
Daily Pivot Point S3	0.7254
Daily Pivot Point R1	0.7442
Daily Pivot Point R2	0.7497
Daily Pivot Point R3	0.7536

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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