AUD/USD Pair Shows Positive Movement Amid US Dollar Decline

The AUD/USD pair found some upward momentum during Asian trading on Thursday, climbing back from its dip below the 0.7000 mark—its lowest point in the week. Currently, it’s hovering around 0.7040, reflecting an increase of nearly 0.40% for the day due to a noticeable drop in the US dollar.

In fact, the US Dollar Index (DXY), which measures the dollar against various other currencies, has pulled back from its highest levels since late March. This shift follows a wave of optimism about a potential US-Iran agreement aimed at resolving the conflict and reopening the Strait of Hormuz. Moreover, the Australian dollar (AUD) is getting a boost from hints from the Reserve Bank of Australia (RBA) suggesting that further interest rate increases might be on the table if inflation remains high. Still, the prospect of the US Federal Reserve raising rates in December could temper aggressive selling of the dollar and put a cap on the AUD/USD pair’s growth.

Looking at the technical side, bearish traders have had the upper hand this week, especially given repeated failures to break past the 100-day simple moving average (SMA) support level. The AUD/USD is currently below the 50% retracement level of the March-May rally, indicating potential selling pressure as prices are restrained at these higher levels. This negative momentum is underpinned by bearish indicators; the Relative Strength Index (RSI) rests around 42, while a slightly negative Moving Average Convergence Divergence (MACD) suggests that upward momentum is waning.

On the upper side, immediate resistance can be seen at the 50% retracement level near 0.7054, followed by the 100-day SMA around 0.7085 and the 38.2% Fibonacci retracement near 0.7106. There’s a stronger barrier at the 23.6% level near 0.7171. Meanwhile, on the downside, initial support is defined by the 61.8% Fibonacci level at 0.7002, with stronger support around the 78.6% level at 0.6928 and the previous swing low around 0.6834. It’s likely that buyers may be more inclined to step in if prices continue to decline.

AUD/USD Daily Chart

(The technical analysis has been crafted with the assistance of AI tools.)