- AUD / USD is witnessing strong selling for the third day in a row and falls to fresh multi-month lows.
- The technical setup remains tilted in favor of the bears and supports the prospects for a further decline.
- Only a sustained move back above the 0.7765-70 region will negate the short-term bearish outlook.
The AUD / USD pair has seen strong selling during the European session on Friday and has fallen to fresh multi-week lows, around the 0.7660 region in the last hour. The drop marks the third consecutive day of negative movement and is due exclusively to a generalized strength of the US dollar.
From a technical perspective, bearish acceptance below the round 0.7700 level could already have laid the groundwork for an extension of the recent downward trajectory. The AUD / USD pair appears poised to extend the recent rejection drop from the key psychological level of 0.8000, to three-year highs.
The bearish outlook is reinforced by the fact that the technical indicators on the daily chart have started to move into negative territory. Therefore, a further slide towards the intermediate support test, around the 0.7610-0.7600 zone, remains a clear possibility.
This last level coincides with the 38.2% Fibonacci retracement of the strong positive move from 0.6990 to 0.8008. Some continuation weakness will be seen as a new trigger for bears. The AUD / USD pair could accelerate the decline towards the 50% Fibonacci, around the round level of 0.7500.
On the other hand, the 0.7700 level now appears to act as a strong immediate resistance. Any further rally above this region could still be seen as a selling opportunity and risks rapidly fading near the 23.6% Fibonacci, around the 0.7765-70 region.
The AUD / USD pair needs to decisively break through this hurdle to nullify the short-term bearish outlook. This, in turn, could trigger a short covering move, which should help the bulls regain the 0.7800 level and aim to test the next relevant resistance near the 0.7835-40 zone.
AUD / USD daily chart
AUD / USD technical levels
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