• AUD/USD drops to a two-week low on Friday amid strong follow-through USD buying.
  • The risk-off impulse exerts additional downward pressure on the risk-sensitive aussie.
  • Bearish traders now await weakness below the monthly low before placing fresh bets.

The AUD/USD pair extends its recent sharp rejection slide from a technically significant 200-day SMA and drifts lower for the fifth successive day on Friday. The downward trajectory drags spot prices to a two-week low, around the 0.6875 region during the mid-European session.

The US dollar prolongs its bullish trend witnessed over the past one-and-a-half week or so and climbs to a one-month high on the last day of the week. This turns out to be a key factor that continues to exert downward pressure on the AUD/USD pair. Adding to this, recession fears trigger a fresh wave of the global risk-aversion trade and further contribute to driving flows away from the perceived riskier aussie.

From a technical perspective, acceptance below the 50% Fibonacci retracement level of the July-August recovery move from over two-year low favors bearish traders. The negative outlook is reinforced by bearish oscillators on the daily chart, which are still far from being in the oversold territory. That said, failure to find acceptance below the 50-day SMA warrants some caution before positioning for a further slide.

Hence, some follow-through selling below the monthly swing low, around the 0.6870-0.6865 region, which coincides with the 61.8% Fibo. level, is needed to confirm a fresh bearish breakdown. The AUD/USD pair might then test the 0.6800 mark and eventually drop to the 0.6765 horizontal zone. The bearish trend could extend towards the 0.6700 round figure en-route the YTD low, around the 0.6680 region touched on July 14.

On the flip side, any meaningful recovery above the 50% Fibo. level could now be seen as a selling opportunity and remain capped near the overnight swing high, around the 0.6970 area. The latter coincides with the 38.2% Fibo. level and is followed by the 0.7000 psychological mark. A convincing break through the said barriers would negate the near-term negative outlook and trigger a short-covering move.

AUD/USD daily chart

fxsoriginal

Key levels to watch

AUD/USD

Overview
Today last price 0.6893
Today Daily Change -0.0025
Today Daily Change % -0.36
Today daily open 0.6918
 
Trends
Daily SMA20 0.6985
Daily SMA50 0.6923
Daily SMA100 0.7063
Daily SMA200 0.7144
 
Levels
Previous Daily High 0.7021
Previous Daily Low 0.6892
Previous Weekly High 0.7137
Previous Weekly Low 0.6898
Previous Monthly High 0.7033
Previous Monthly Low 0.668
Daily Fibonacci 38.2% 0.6941
Daily Fibonacci 61.8% 0.6972
Daily Pivot Point S1 0.6866
Daily Pivot Point S2 0.6814
Daily Pivot Point S3 0.6737
Daily Pivot Point R1 0.6996
Daily Pivot Point R2 0.7073
Daily Pivot Point R3 0.7125

 

 

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