Solid Support Breach Clears the Way for Fresh Downside Leg

Forex

Economic

Summary:

These moving averages have recently executed a downward crossover, a technical adjustment that increases the structural sell-side pressure and favors a continuation along the current downward path.

SELL AUDUSD

EXP

TRADING

0.70170

Entry Price

0.69140

0.71000

0.70075 -0.00194 -0.28%

0.0

Pips

Flat

0.69140

Exit Price

0.70170

Entry Price

0.71000

In Australia, RBA Governor Michele Bullock emphasized on Thursday that the central bank remains strictly focused on curbing inflation, following three interest rate hikes earlier this year that pushed the cash rate to 4.35%. Bullock added that inflation is too high and that the board will do what is necessary to fulfill its mandate of delivering price stability and full employment. This comes even though 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.

On the geopolitical front, U.S. President Donald Trump published today on Truth Social that Iran had shot down an American Apache helicopter patrolling over the strategic Strait of Hormuz. "Nonetheless, the United States must, by necessity, respond to this attack," Trump wrote. Meanwhile, Israel pushed forward with military operations in southern Lebanon despite both sides previously agreeing to halt attacks, while Iran warned that fighting could easily restart if Israel continued its "aggression." These latest developments have dampened expectations for a near-term peace agreement between the United States and Iran. The two sides also remain far apart on key structural issues, including Iran's nuclear program, the release of frozen financial assets, and Tehran's demand for greater control over the Strait of Hormuz maritime corridor.

On the economic front, the official NFP employment report revealed that the United States generated 172,000 jobs in May, coming in at more than double the market expectation of 85,000 positions. Furthermore, the hiring data for April was strongly revised upward, printing at 179,000 jobs compared to the 115,000 published a month ago. Despite this hot print, other recent data from the U.S. labor market showed a larger-than-expected deterioration. Initial jobless claims for the week ending May 30 rose to 225,000, coming in above both the 213,000 projected by the market and the 212,000 reported during the previous week. In the same manner, the four-week moving average increased to 214,750 claims from the previous 208,250, pointing to a gradual moderation in overall employment conditions. Along the same line, job cuts announced by Challenger, Gray & Christmas rose from 83,387 to 97,006 in May, with the technology sector making up about 39% of the layoffs, which represents a 16% increase compared to the prior month. Solid Support Breach Clears the Way for Fresh Downside Leg_1

Solid Support Breach Clears the Way for Fresh Downside Leg_1

Technical Analysis

From a chart perspective, AUD/USD completed a solid break below the horizontal support level that was located at 0.7078. This breakout is currently consolidating, and given the active bearish structure visible on the chart, price action has the potential to expand another leg lower toward the next important support floor at 0.6914. This zone represents a key technical milestone that the pair has not visited since April 6, when it traded at similar historical levels. For the time being, the price is moving further away from the 100 and 200-period Moving Averages, which are currently running at 0.7132 and 0.7164, respectively. These moving averages have recently executed a downward crossover, a technical adjustment that increases the structural sell-side pressure and favors a continuation along the current downward path.

A review of the oscillator section provides further cross-verification for this developing downward move. The Relative Strength Index (RSI) is currently tracking at the 31 level, trading right on the edge of the oversold boundary. However, looking back at recent chart history shows that the index dropped to a lower bottom of 18. Even though the price is currently trading at lower absolute levels than before, the fact that the RSI has recovered to this point suggests that the macro sellers have successfully rebuilt their strength, giving them room to push the asset lower.

At the same time, the MACD indicator shows a persistent negative histogram that is holding its ground, while the signal lines remain deeply embedded within the negative quadrant. This combination of indicators suggests that the downward direction remains the path of least resistance for the pair, keeping the focus on selling short-term price bounces under the broken support ceiling.

Trading Recommendations

Trading direction: Sell

Entry price: 0.7015

Target price: 0.6914

Stop loss: 0.7100

Validity: Jun 19, 2026 15:00:00

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Solid Support Breach Clears the Way for Fresh Downside Leg

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