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AUD/USD Price Analysis: Rebounds from two-year lows, but not out of the woods yet

  • A combination of factors help AUD/USD rebound from a two-year low.
  • Pullback in US bond yields sparks dollar profit-taking and offers support.
  • A positive shift in risk sentiment also benefits the risk-sensitive Aussie.

The pair AUD/USD it recovers from its lowest level since April 2020, reached earlier this Wednesday, although it lacks bullish conviction. The pair is currently hovering around the 0.6425-0.6430 zone and remains at the mercy of the US dollar’s price action.

The spillover effect of Bank of England intervention to prop up the gilt market triggers a sharp drop in US Treasury yields. This, coupled with a positive shift in global risk sentiment, forces the safe-haven dollar to cut some of its intraday gains to a new 20-year high and benefits the risk-sensitive Aussie.

That said, growing concerns about a deeper economic recession and the risk of a further escalation in the conflict between Russia and Ukraine should dampen any bullish moves in the markets. Aside from this, bets that the Fed will maintain its aggressive monetary policy tightening path continue to act as a tailwind for the dollar and cap the AUD/USD pair.

From a technical point of view, the drop on the first day of the week confirmed a bearish break below the support of the descending channel that extends from May. The aforementioned support breakout point around the key psychological level 0.6500 should now act as a pivot point. Any subsequent upside move could hit a snag near the weekly high around the 0.6535-0.6540 area.

Sustained strength beyond the latter could trigger a short-covering move and allow the AUD/USD pair to retrace 0.6600. Some buying will suggest the pair has bottomed out and pave the way for an extension of the rally towards the next relevant barrier near the 0.6655-0.6670 supply zone.

On the other hand, weakness below 0.6400 will nullify the prospects for any significant upside and make the AUD/USD pair vulnerable to retesting the year’s low around the 0.6365 area. The bearish trajectory could extend further towards the 0.6300 round level, although the oversold RSI (14) on the daily chart advises bears to be cautious.

AUD/USD daily chart

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Key levels to watch

AUD/USD

Overview
last price today 0.6427
daily change today -0.0008
Today’s daily variation in % -0.12
Daily opening today 0.6435
Trends
daily SMA20 0.6712
daily SMA50 0.686
daily SMA100 0.6917
daily SMA200 0.7087
levels
Previous daily high 0.6513
Previous Daily Low 0.6414
Previous Weekly High 0.6748
Previous Weekly Low 0.6512
Previous Monthly High 0.7137
Previous Monthly Low 0.6835
Daily Fibonacci of 38.2% 0.6452
Daily Fibonacci of 61.8% 0.6475
Daily Pivot Point S1 0.6395
Daily Pivot Point S2 0.6355
Daily Pivot Point S3 0.6295
Daily Pivot Point R1 0.6494
Daily Pivot Point R2 0.6553
Daily Pivot Point R3 0.6593

Source: Fx Street

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