- AUD/USD fell for the second day in a row amid resurgence in USD demand.
- The technical setup favors bearish traders and supports the prospects for further losses.
- Sustained weakness below the 0.7400 mark is needed to confirm the negative outlook.
The pair AUD/USD it extended its steady intraday decline earlier in the American session and fell to a fresh daily low around the 0.7415 region in the last hour.
The US dollar made a solid recovery on Thursday amid the shared currency’s post-ECB slump and a modest rebound in US Treasury bond yields. This, in turn, was seen as a key factor. which dragged the AUD/USD pair lower for the second day in a row, although the risk boost could help limit losses for the perceived riskier Aussie.
From a technical perspective, the pair’s inability to capitalize on the nice overnight bounce from a more than three-week low and the onset of fresh selling favors bearish traders. That said, the repeated failures to find acceptance below the 0.7400 round level warrants some caution before positioning for any further downside moves.
The aforementioned level also marks confluence support comprising the 200-period SMA on the 4-hour chart and the 50% retracement level of the strong rally from 0.7165-0.7662. A convincing break below will be seen as a new trigger for bearish traders and will make the AUD/USD pair vulnerable to testing the 61.8% Fibonacci level around 0.7350.
This is closely followed by an uptrend line extending from levels below 0.7000, or the yearly low hit in January. Such support is currently pegged around the 0.7330 region, which if broken decisively should pave the way for an extension of the recent sharp pullback from yearly highs, around the 0.7660 region touched earlier this month.
Given that the technical indicators on the daily chart have just started to slide into negative territory, the AUD/USD pair could accelerate the decline towards 0.7300. Some follow-through selling would make the pair vulnerable to extending the downward path towards the 0.7240 region on the way to the 0.7200 mark and 0.7175-0.7170 support.
On the other hand, the daily high near the 0.7465-0.7470 region, which coincides with the 38.2% Fibonacci level, should act as strong immediate resistance ahead of the 0.7500 mark. Sustained strength beyond that would suggest that the corrective pullback has run its course and shift the short-term bias in favor of bullish traders.
AUD/USD 4-hour chart
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
