- 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
-637965094149259894.png)
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD steadies above 1.0600, awaits German ZEW and Powell speech
EUR/USD is holding above 1.0600 in the European morning on Tuesday, having hit fresh five-month lows. The pair draws support from sluggish US Treasury bond yields but the rebound appears capped amid a stronger US Dollar and risk-aversion. Germany's ZEW survey and Powell awaited.
GBP/USD stays below 1.2450 after UK employment data
GBP/USD trades marginally lower on the day below 1.2450 in the early European session on Tuesday. The data from the UK showed that the ILO Unemployment Rate in February rose to 4.2% from 4%, weighing on Pound Sterling.
Will Gold reclaim $2,400 ahead of Powell speech?
Gold price consolidates the rebound below $2,400 amid risk-aversion. Dollar gains on strong US Retail Sales data despite easing Middle East tensions. Bullish potential for Gold price still intact on favorable four-hour technical setup.
SOL primed for a breakout as it completes a rounding bottom pattern
Solana price has conformed to the broader market crash, following in the steps of Bitcoin price that remains in the red below the $65,000 threshold. For SOL, however, the sensational altcoin could have a big move in store.
Key economic and earnings releases to watch
The market’s focus may be on geopolitical issues at the start of this week, but there is a large amount of economic data and more earnings releases to digest in the coming days.