AUD/USD bulls face strong headwinds from the thick daily Ichimoku cloud

The Australian dollar remains on the front foot, testing the key resistance zone around 0.7050 for a second consecutive session. This area, marked by the base of the daily Ichimoku cloud and the 23.6% Fibonacci retracement of the 0.7277–0.6978 decline, continues to cap upside attempts despite Thursday’s nearly 1% rally.

The latest recovery was triggered by another successful defense of the psychologically important 0.7000 support level, which also coincides with the 61.8% Fibonacci retracement of the 0.6833–0.7277 advance. However, bullish momentum has begun to fade as the pair encounters significant resistance from the thick daily Ichimoku cloud.

The near-term outlook remains mixed. While the rebound remains intact, daily technical indicators continue to lean bearish. Negative momentum is strengthening, and bearish moving-average crossovers between the 10- and 100-day averages as well as the 20- and 55-day averages continue to weigh on sentiment. At the same time, the formation of a weekly Doji candle following last week’s large bearish candle may signal the early stages of a reversal pattern and provide support for further recovery attempts.

Traders should remain cautious of another rejection below the cloud base, as repeated failures to break higher could undermine bullish momentum and diminish prospects for a stronger advance. However, the lack of follow-through buying may also reflect a more cautious market stance ahead of next Tuesday’s Reserve Bank of Australia policy meeting. While the RBA is widely expected to leave the cash rate unchanged at 4.35%, investors will be closely watching for guidance on the policy outlook amid rising inflationary pressures and slowing economic growth.

Res: 0.7050; 0.7083; 0.7108; 0.7129
Sup: 0.7021; 0.7000; 0.6978; 0.6938