What Happened
AUD/USD dropped sharply on Friday, falling 0.91% to trade around 0.7155 โ its lowest level in more than a week. The pair has now declined for two consecutive sessions, with broad-based US Dollar strength driving the selling pressure. The move comes as traders reprice Federal Reserve interest rate hike expectations, pushing money back into the greenback and away from risk-sensitive currencies like the Australian Dollar.
Key Levels
Support levels:
- 0.7130 โ near-term floor; a break here opens the door to further downside
- 0.7100 โ round-number psychological support and a key level watched by technical traders
Resistance levels:
- 0.7200 โ immediate overhead resistance; reclaiming this level would ease selling pressure
- 0.7240 โ stronger resistance zone from earlier this week’s trading range
Technical Picture
The pair is trading in a short-term downtrend, having broken below the 0.7200 handle with momentum. Price action is now testing the lower end of recent ranges. The two-day selloff suggests bearish momentum is building, and the pair risks further downside if USD strength continues. RSI is moving into oversold territory on shorter timeframes, which could spark a brief bounce โ but the overall trend favours sellers.
What Traders Are Watching
The critical level to watch is 0.7130. A daily close below this level would confirm a deeper correction and could bring 0.7100 into play quickly. On the upside, bulls need to recapture 0.7200 to stabilise the pair. Any shift in Fed rate hike rhetoric โ particularly from upcoming US economic data โ could accelerate moves in either direction.
Bias
Bearish. The repricing of Federal Reserve rate hike expectations is fuelling USD demand, and the Aussie remains vulnerable while that dynamic holds. Until AUD/USD reclaims 0.7200, the path of least resistance is lower.
Source: Read original article