AUD/USD Falls as Fed Rate-Hike Bets Strengthen Dollar

Traders' Opinions

Summary:

The Australian Dollar fell for a third consecutive session as escalating tensions between the US and Iran boosted demand for the US Dollar. Strong US inflation data and growing expectations of another Federal Reserve rate hike added further pressure on the risk-sensitive Aussie.

SELL AUDUSD

Close Time

CLOSED

0.69900

Entry Price

0.68800

0.70350

0.70498 -0.00009 -0.01%

45.0

Pips

Loss

0.68800

0.70350

Exit Price

0.69900

Entry Price

0.70350

The Australian Dollar weakened against the US Dollar on Thursday, extending its losing streak to a third consecutive session as investors sought the safety of the Greenback amid escalating geopolitical tensions and growing expectations that the Federal Reserve may need to tighten policy further.

Market sentiment remained fragile as the United States and Iran exchanged attacks for a second straight day. While President Donald Trump warned of additional military action if Tehran fails to reach a peace agreement, reports from diplomatic sources suggested negotiations remain ongoing, leaving investors uncertain about the conflict's trajectory.

The situation has fueled concerns about potential disruptions to global energy supplies, particularly through the Strait of Hormuz, a critical route for oil shipments. Such risks have encouraged a broader shift away from risk-sensitive currencies, weighing heavily on the Australian Dollar.

Meanwhile, the US Dollar continued to draw support from recent economic data. US inflation accelerated to its highest annual pace in more than three years, while last week's strong labor market report reinforced expectations that the Federal Reserve could raise interest rates again before year-end.

In Australia, stronger Chinese trade data offered only limited support. Weak domestic consumer confidence figures and concerns about slowing economic growth offset any positive impact from China's performance.

Attention now turns to next week's Reserve Bank of Australia meeting. The central bank is widely expected to keep rates unchanged, but investors will closely monitor its guidance for clues on whether weakening economic conditions could eventually pave the way for future rate cuts.

The Australian Dollar remains vulnerable as long as geopolitical risks remain elevated and expectations for higher US interest rates continue to support the Greenback. The RBA's outlook next week will be critical in determining whether AUD/USD can stabilize or face further downside pressure.

Technical Analysis

AUD/USD remains firmly under bearish pressure on the 4-hour chart after breaking below several key support zones that had previously underpinned the broader consolidation range. The pair has decisively fallen beneath the 0.7100 support area and subsequently breached the 0.7020 region, confirming a shift in momentum from neutral to bearish. The recent decline has been characterized by a series of lower highs and lower lows, highlighting growing downside conviction among sellers.

Price action is currently hovering around the 0.6995–0.7000 area, a psychologically important zone that is struggling to contain the latest wave of selling pressure. The inability of buyers to generate a meaningful rebound following the breakdown suggests that bearish momentum remains dominant. What was previously a support zone near 0.7020 has now turned into immediate resistance, reinforcing the negative near-term outlook.

A sustained move below the 0.7000 psychological level would likely accelerate downside momentum and expose the next major support region around 0.6910–0.6920. This area represents a significant historical demand zone and aligns with the projected downside path illustrated on the chart. Failure to stabilize above this support could trigger a deeper correction toward the 0.6880 region, where buyers may attempt to re-establish control.

On the upside, any recovery attempt is likely to encounter initial resistance near 0.7020, followed by stronger selling interest around the 0.7100 zone. A decisive break back above 0.7100 would be required to invalidate the current bearish structure and signal that downside momentum is beginning to fade. Beyond that, the 0.7180 area remains the next major resistance level, though current price action suggests such a move is unlikely without a significant shift in market sentiment.

Momentum indicators would likely reflect increasing bearish pressure. The Relative Strength Index (RSI) is likely trading below the neutral 50 level and approaching oversold territory, indicating strong downside momentum while also suggesting that short-term corrective rebounds cannot be ruled out. Meanwhile, the Moving Average Convergence Divergence (MACD) would likely remain below the zero line with widening negative histogram bars, confirming that bearish momentum continues to strengthen rather than stabilize.

Overall, the technical picture favors further downside while AUD/USD remains below the 0.7020 and 0.7100 resistance levels. The recent breakdown from a multi-week range has shifted the balance decisively in favor of sellers, with the focus now firmly on whether the pair can hold above the key 0.6910 support zone.

TRADE RECOMMENDATION

SELL AUD/USD

ENTRY PRICE: 0.6990

STOP LOSS: 0.7035

TAKE PROFIT: 0.6880

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AUD/USD Falls as Fed Rate-Hike Bets Strengthen Dollar

Technical Analysis

Risk Disclosure