Bearish Momentum Accelerates Following Rejection at Key Zone

Forex

Economic

Summary:

Since the price turned downward immediately upon hitting these markers, it increases the probab.ility that the previous upward move was only a temporary corrective pullback

SELL AUDUSD

Close Time

CLOSED

0.71290

Entry Price

0.70300

0.71900

0.70010 +0.00192 +0.28%

76.8

Pips

Profit

0.70300

0.70522

Exit Price

0.71290

Entry Price

0.71900

Geopolitical frictions in the Middle East continue to mount following a sequence of retaliatory strikes between Iran and the United States near the strategic Strait of Hormuz. The U.S. Central Command (CENTCOM) confirmed it carried out defensive operations against Iranian missile positions and naval ships that were believed to be prepared to lay sea mines. In response, Tehran directed strikes against American military installations situated across several Gulf nations, including Kuwait, the United Arab Emirates, and Saudi Arabia. This worsening conflict has driven crude oil prices higher, as the chances of restarting diplomatic talks look increasingly unlikely. The Iranian news agency Fars reported that negotiations are completely stalled, though U.S. President Donald Trump has publicly dismissed that description.

Meanwhile, economic releases from the United States continue to point to a highly resilient labor market. The ADP employment report showed the addition of 122,000 jobs in May, coming in above the projected forecast of 117,000. This stable employment reading follows the JOLTS data published on Tuesday, which showed an increase in open job vacancies, further confirming the steady nature of American hiring ahead of the official Non-Farm Payrolls report, where analysts anticipate an addition of 85,000 jobs.

Furthermore, the services sector in the United States also printed signals of economic expansion, as the ISM Services PMI climbed from 53.6 to 54.5 in May, pushed higher by businesses accelerating their orders due to expectations of rising future costs. At the same time, the Prices Paid component ticked up from 70.7 to 71.3, showing that the recent push in energy costs is starting to filter into the broader services economy. Despite these underlying factors, New York Fed President John Williams repeated that current monetary policy sits exactly where it needs to be, noting that he sees no clear reason at the moment to either increase or decrease interest rates.

In contrast, the Australian economy showed clear signs of slowing down during the first quarter of the year. According to data published on Wednesday by the Australian Bureau of Statistics, Gross Domestic Product (GDP) grew at an annual rate of 2.5%, coming in below the 2.6% recorded in the same period a year earlier and missing the market expectation of a 2.7% expansion. On a quarter-over-quarter basis, economic activity increased by just 0.3%, falling short of the projected 0.5% forecast and moderating significantly from the 0.8% growth rate observed in the previous quarter.

Business activity indicators also highlighted this loss of momentum across the private sector. The S&P Global Services PMI fell to 48.7 in May, down from its previous level of 50.7, though it managed to beat the initial market estimate of 47.7. Similarly, the Composite PMI was revised upward to 48.7 from a lower preliminary reading, landing above the general consensus of 47.8. Despite these positive updates, both metrics remain below the neutral 50-point threshold, pointing to a continued contraction in private sector business conditions. This economic backdrop is further reinforced by the recent cooling of consumer inflation and a steady increase in the national unemployment rate, which reached its highest level in nearly four and a half years during April. As a direct result, market participants have sharply reduced their expectations for the Reserve Bank of Australia (RBA) to implement another interest rate hike at its upcoming policy meeting in June. Bearish Momentum Accelerates Following Rejection at Key Zone_1

Bearish Momentum Accelerates Following Rejection at Key Zone_1

Technical Analysis

From a chart perspective, AUD/USD faced a clear downward rejection after touching the 100 and 200-period Moving Averages, which were running very close to each other at 0.7178 and 0.7173, respectively. This tight clustering formed a wall of selling that buyers could not overcome, and the resulting downward move now appears to be shifting in a decisive manner. Because of this setup, the downward movement has room to expand toward the 0.7029 area, which stands as the next local support floor. It is important to note that the specific area where this rejection started is also reinforced by the 0.50 and 0.618 Fibonacci retracement levels. Since the price turned downward immediately upon hitting these markers, it increases the probability that the previous upward move was only a temporary corrective pullback, leaving the bearish impulse as the dominant force on the chart.

A look at the oscillator section provides further confirmation for this accelerating downward path. The Relative Strength Index (RSI) is currently tracking at the 34 level, moving close to oversold boundaries. However, because the index has historically reached much lower levels during past declines, the price has enough room to keep moving down from this current spot and potentially print fresh lower lows.

At the same time, the MACD indicator is already printing a negative histogram that is steadily gaining downward depth, while its signal lines have recently crossed down toward the neutral zone. This setup indicates that the downward move is actively building up its strength, which keeps the technical outlook favoring short entries. So long as price action remains capped underneath the moving average resistance block, the path of least resistance points lower, making any short-term upward bounces vulnerable to renewed selling pressure.

Trading Recommendations

Trading direction: Sell

Entry price: 0.7128

Target price: 0.7030

Stop loss: 0.7190

Validity: Jun 16, 2026 15:00:00

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Bearish Momentum Accelerates Following Rejection at Key Zone

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