- AUD / USD prolonged its recent bearish trajectory and fell to fresh multi-month lows.
- The oversold conditions on the short-term charts helped limit any further losses, at least for now.
- Sustained weakness below 0.7100 will set the stage for additional short-term losses.
The pair AUD/USD It fell to the lowest level since November 2020 on Friday, although it managed to find some support near the 0.7100 mark. The pair was last seen trading around the 0.7125-30 region, shedding 0.25% on the day.
The worsening COVID-19 situation in Australia, coupled with the prevailing environment of absent risk, turned out to be a key factor that continued to weigh on the Australian perceived as riskier. Aside from this, expectations that the Fed will start to roll back its pandemic-era stimulus acted as a tailwind for the safe-haven US dollar and put even more pressure on the AUD / USD pair.
From a technical perspective, this week’s drop below a month-long trading range support confirmed a further bearish breakout and dragged the AUD / USD pair lower for the fifth session in a row. However, the oversold conditions on the short-term charts prevented traders from making further bearish bets and extended some support to the majors / helped limit further losses, at least for now.
That said, the inability of the AUD / USD pair to post a significant recovery suggests that the short-term bearish trajectory may still be far from over. Therefore, any subsequent upward movement could still be seen as a short opportunity near the 0.7150-55 region. Some subsequent purchases could trigger some short hedging move and allow the pair to aim to recover 0.7200.
Conversely, bearish traders could now wait for sustained weakness below the 0.7100 round level before positioning for any further depreciation moves. The AUD / USD pair could accelerate the decline towards intermediate support near the 0.7040-30 region before finally falling to the key psychological level of 0.7000.
AUD / USD daily chart
Technical levels
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