AUD/USD Price Analysis: Drops to fresh daily low around mid-0.7100s, 38.2% Fibo. level

The AUD/USD pair witnessed a modest pullback from a three-and-half-week high, levels just above the 0.7200 mark touched earlier this Tuesday and eroded a major part of the overnight gains. The pair maintained its offered tone through the early North American session and dropped to a fresh daily low, closer to mid-0.7100s in the last hour.

The overnight hawkish comments by Fed Governor Christopher Waller, along with a sharp spike in the US Treasury bond yields, assisted the US dollar to stage a solid rebound from over a one-month low. Apart from this, the worsening global economic outlook and the risk-on impulse further boost the safe-haven greenback and exerted some downward pressure on the risk-sensitive aussie.

Despite the negative factors, the AUD/USD pair, so far, has managed to hold its neck above the 38.2% Fibonacci retracement level of the 0.7662-0.6829 downfall. This is followed by the 0.7130 confluence support, comprising the 200-period SMA on the 4-hour chart and the lower boundary of an ascending channel extending from the YTD low touched earlier this month.

Given that technical indicators on daily/4-hour charts are still holding in the positive territory, the set-up favours bullish traders and supports prospects for the emergence of some dip-buying. That said, a convincing breakthrough the aforementioned confluence support will negate the positive outlook and shift the bias in favour of bearish traders, prompting some technical selling.

Some follow-through selling below the 0.7100 mark will reaffirm the bearish bias and drag spot prices to the 23.6% Fibo. level support, near the 0.7025-0.7020 region. The next relevant support is pegged near the 0.7000 psychological mark, below which the AUD/USD pair could slide to the 0.6940 area en-route the 0.6900 mark and the 0.6830-0.6825 region, or the YTD low.

On the flip side, a sustained move beyond the 0.7200 round figure is likely to confront resistance near the 100-day SMA, around the 0.7235-0.7245 region. The said barrier coincides with the 50% Fibo. level and is closely followed by the 200-day SMA, near the 0.7260 zone, which if cleared would be seen as a fresh trigger for bullish traders and pave the way for further gains.

AUD/USD 4-hour chart

Key levels to watch