Bullish Resumption Poised After AUD/USD Pullback to Dynamic Support Horizons

Central Bank

Economic

Summary:

Given that these levels have provided reliable dynamic support in recent sessions, we could be on the verge of a bullish resumption

BUY AUDUSD

Close Time

CLOSED

0.71550

Entry Price

0.72200

0.71250

0.72070 +0.00246 +0.34%

34.6

Pips

Profit

0.71250

0.71896

Exit Price

0.71550

Entry Price

0.72200

The geopolitical landscape remains significantly strained as Iran’s Fars news agency recently reported that two missiles successfully struck a United States naval vessel in the vicinity of Jask Island. According to these reports, the strike occurred after the vessel allegedly disregarded explicit warnings from the Islamic Revolutionary Guard Corps (IRGC) to cease its operations. This incident follows the recent announcement of "Project Liberty" by U.S. President Donald Trump, a naval initiative designed to provide military escorts for commercial ships currently stranded within the Strait of Hormuz. In a direct response to this project, Tehran issued a stern warning, stating its intent to target American forces should they attempt to enter or navigate the strategic waterway. However, a U.S. official speaking via Axios has denied that any American vessel was impacted, illustrating the high degree of conflicting information and friction currently defining the region.

Diplomatic channels appear to be at a complete standstill as Washington has officially rejected Iran’s revised 14-point peace proposal. In its place, the United States has presented a counter-offer that is currently undergoing review in Tehran, though fundamental disagreements regarding nuclear protocols remain largely unresolved. These ongoing supply disruptions within the Strait of Hormuz are exerting sustained upward pressure on crude oil prices, which in turn continues to fuel global inflationary risks. The resulting energy shock is placing immense pressure on global central banks, particularly the Federal Reserve, to maintain restrictive borrowing costs for a more extended period or even consider further tightening should price pressures continue to intensify. This hawkish environment is driving U.S. Treasury yields higher, which is naturally weighing on non-yielding assets like gold.

Market expectations for Federal Reserve policy have undergone a notable shift, according to the latest readings from the CME FedWatch Tool. While the Fed is expected to hold rates steady for the remainder of this year, investors are increasingly pricing in the possibility of rate hikes in 2027. Specifically, the probability of a rate increase in January 2027 has surged to 22%, rising from nearly 0% just one week ago. Simultaneously, the Reserve Bank of Australia (RBA) is widely anticipated to announce a 25-basis-point interest rate hike, which would mark the institution's third consecutive increase. If confirmed, the Official Cash Rate (OCR) would ascend to 4.35% from 4.10%, a move that would reinforce the central bank's steadfast commitment to curbing persistent domestic inflationary pressures.

This anticipated RBA action comes in the wake of March Consumer Price Index (CPI) data, which recorded a 4.6% year-over-year expansion. While this figure arrived slightly beneath initial market forecasts, underlying inflation continues to oscillate stubbornly above the RBA’s mandated target range. Following the data release, three-year bond yields experienced a moderate retreat, and the implied probability of a rate hike at the upcoming assembly settled at approximately 68%. This data reflects a delicate equilibrium currently playing out in the Australian economy, where slightly softer underlying indicators are being balanced against the reality of elevated crude oil prices as the markets move into the second quarter. Bullish Resumption Poised After AUD/USD Pullback to Dynamic Support Horizons_1

Bullish Resumption Poised After AUD/USD Pullback to Dynamic Support Horizons_1

Technical Analysis

From a technical perspective, the AUD/USD pair has undergone a corrective downward move after striking a local peak of 0.7227 on May 1. During the inaugural session of the week, price action retreated to a critical support floor situated at 0.7152. This specific zone carries significant technical weight as it aligns precisely with the 200-period Moving Average at 0.7151, while the 100-period Moving Average is tracking closely at 0.7165. Given that these levels have provided reliable dynamic support in recent sessions, we could be on the verge of a bullish resumption targeting the primary ascending trendline near the 0.7219 handle.

Our analysis of momentum oscillators further supports the potential for an upside pivot from these levels. The Relative Strength Index (RSI) has retreated to the 35 level, signaling that the pair is fast approaching oversold territory and may be due for a bullish intervention. Simultaneously, while the MACD continues to print a bearish histogram, it has notably begun to lose depth, suggesting that downward momentum is starting to wane. The signal lines are currently approaching the neutral threshold; should the price reject the current support zone without the signal lines crossing decisively into negative territory, we could see a confirmed renewal of the broader bullish impulse.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7155

Target price: 0.7220

Stop loss: 0.7125

Validity: May 15, 2026 15:00:00

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Bullish Resumption Poised After AUD/USD Pullback to Dynamic Support Horizons

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