AUD/USD falls to a fresh daily low below the 0.7000 level

  • AUD/USD sees some selling on Friday and breaks a two day gain streak to weekly high.
  • The appearance of new purchases around the USD turns out to be a key factor putting downward pressure on the pair.
  • The pullback in US bond yields and the positive risk tone could cap dollar gains and offer support for the pair.

The pair AUD/USD it struggled to capitalize on strong gains posted in the last two sessions and was met with fresh selling on Friday. The pair continued to lose ground during the European session and weakened below the psychological level of 0.7000reaching a new daily low in the last hour.

The expectation that the Federal Reserve will maintain its tightening policy to curb rising inflation it revived demand for the US dollar, which in turn triggered further selling around the AUD/USD pair. It is worth remembering that the so-called dot plot showed that the median projection of the federal funds rate was 3.4% for 2022 and at 3.8% for 2023.

The dollar, for now, appears to have capped the post-FOMC pullback from a two-decade high and snapped a two-day losing streak to hit a one-week low hit the previous day. That said, a combination of factors could curb dollar bulls and offer some support to the AUD/USD pair, at least for now.

Investors were reassured by the Fed’s view that the interest rate could drop to 3.4% in 2024 and 2.5% in the long term. This caused a further decline in US Treasury yields. Apart of this, signs of stability in financial markets could weigh on safe-haven US dollar demand and help limit the pair’s deeper losses, sensitive to risk.

Therefore, it will be prudent to wait for a strong follow-up of selling before confirming that the AUD/USD rebound from the monthly low reached earlier this week is over. Market participants now await the US economic calendar, with the release of industrial production data and the capacity utilization rate later at the start of the American session.

Also, US bond yields could influence dollar price dynamics and give the AUD/USD pair some momentum. Investors will be following signs of broader market risk sentiment to take advantage of some short-term opportunities on the final day of the week.

AUD/USD technical levels

AUD/USD

Panorama
Last Price Today 0.699
Today’s Daily Change -0.0063
Today’s Daily Change % -0.89
Today’s Daily Opening 0.7053
Trends
20 Daily SMA 0.7113
50 Daily SMA 0.715
100 Daily SMA 0.7222
200 Daily SMA 0.7244
levels
Previous Daily High 0.707
Previous Daily Minimum 0.6942
Previous Maximum Weekly 0.7248
Previous Weekly Minimum 0.7036
Monthly Prior Maximum 0.7267
Previous Monthly Minimum 0.6828
Daily Fibonacci 38.2% 0.7021
Daily Fibonacci 61.8% 0.6991
Daily Pivot Point S1 0.6973
Daily Pivot Point S2 0.6894
Daily Pivot Point S3 0.6846
Daily Pivot Point R1 0.7101
Daily Pivot Point R2 0.7149
Daily Pivot Point R3 0.7228

Source: Fx Street

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