- The AUD/USD pair falls to its lowest level since January amid sustained USD buying and a state of risk aversion.
- Weakness below the 200-day SMA and 38.2% Fibo paves the way for further losses.
- A recovery attempt above 0.6800 could be seen as a selling opportunity.
The pair AUD/USD it suffers strong selling pressure on the last day of the week and sinks to the 0.6750 zone, which is a new low since January 6 during the mid-European session.
Strong expectations that the Federal Reserve will keep interest rates higher for longer on the back of stubbornly high inflation continue to push the US dollar higher. Apart from this, the prevailing state of risk aversion – amid imminent risks of recession and geopolitical tensions – benefits the dollar as a safe haven and steers flows away from the risk sensitive.
The aforementioned fundamental factors are dragging the AUD/USD pair below a technically significant 200-day SMA. A subsequent drop below the 38.2% Fibonacci retracement level of the October 2022 to February 2023 rally could be seen as a new trigger for the bears and could have already set the stage for deeper losses.
The negative outlook is reinforced by the fact that the oscillators on the daily chart remain in bearish territory and are still far from the oversold zone. Therefore, a pullback towards 0.6700 is highly likely, en route to the lows around the 0.6685 zone that was set in January.
On the other hand, the 0.6780 zone, or the 38.2% Fibonacci level, now seems to act as an immediate hurdle ahead of the 200-day SMA, near 0.6800. Any further recovery is likely to attract new sellers near the 0.6855-0.6860 zone. Short positions around the AUD/USD pair.
AUD/USD daily chart
Key levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
