The AUD/USD currency pair regained positive momentum during the Asian session on Thursday, reversing part of the previous day's decline to sub-0.7000 levels, which marked the weekly low. Spot prices are currently trading around the 0.7040 region, representing an increase of nearly 0.40% for the day, driven by a broadly weaker US Dollar (USD) [1]. The USD Index (DXY) retreated from its highest level since late March, influenced by optimism surrounding a potential US-Iran deal to end the war and reopen the Strait of Hormuz [1].
Additionally, the Reserve Bank of Australia (RBA) provided a hawkish signal, indicating that further rate hikes are possible if inflation remains stubbornly elevated. This stance has supported the Australian Dollar (AUD) and the AUD/USD pair [1]. However, rising market expectations for an interest rate hike by the US Federal Reserve (Fed) in December may limit aggressive USD bearish bets and cap gains in the currency pair [1].
From a technical perspective, repeated failures near the 100-day Simple Moving Average (SMA) support breakpoint favor bearish traders. The AUD/USD pair remains below the 50% retracement of the March-May upswing, suggesting rallies are likely to be sold into while spot prices are capped beneath these overhead levels. Bearish momentum indicators, including a Relative Strength Index (RSI) near 42 and a slightly negative Moving Average Convergence Divergence (MACD) reading, reinforce the negative outlook [1].
Immediate resistance is seen at the 50% retracement around 0.7054, followed by the 100-day SMA near 0.7085 and the 38.2% Fibonacci retracement at 0.7106. A stronger barrier exists at the 23.6% level around 0.7171. On the downside, initial support is defined by the 61.8% Fibo. level at 0.7002, with deeper cushions at the 78.6% level around 0.6928 and the prior swing low near 0.6834, where buyers may show more interest if the decline extends [1].
The US Dollar was the strongest against the Canadian Dollar today, while it weakened against the Australian Dollar by 0.36% [1].
CONCLUSION
The AUD/USD pair has rebounded on the back of a weaker US Dollar and hawkish signals from the RBA, but technical resistance levels and bearish momentum indicators suggest upside may be limited. Market participants are closely watching resistance at 0.7054 and the 100-day SMA, while expectations for a Fed rate hike in December could cap further gains. Overall, sentiment is cautiously optimistic but tempered by technical and macroeconomic headwinds.