Australian Dollar Under Pressure as Hawkish Fed Outlook Strengthens US Dollar

AUDUSD tumbled to a seven-week low on Wednesday, accelerating its decline as the US dollar remained firmly supported by expectations that elevated oil prices will sustain inflationary pressures and reinforce the Federal Reserve’s tightening bias.

The Australian dollar was down more than 1% by early US trading, putting the pair on track for its steepest one-day decline since June 23.

The break below key support levels at 0.7070, where the 55-day and 100-day moving averages converged, and 0.7050, which marks both the top of the ascending daily Ichimoku cloud and the 50% Fibonacci retracement of the 0.6865/0.7237 rally, has strengthened the bearish outlook. The move also completed a bearish failure-swing pattern on the daily chart, adding weight to expectations of deeper losses.

Attention now turns to downside targets at 0.7016, the 200-day moving average, followed by 0.7007, the 61.8% Fibonacci retracement, and the pivotal 0.7000 psychological level, which also coincides with the base of the daily Ichimoku cloud.

The technical picture remains negative, with the daily Tenkan-sen and Kijun-sen extending lower after forming a bearish crossover, while downside momentum continues to gather strength.

A decisive breach of the 0.7000 support zone would further weaken the near-term structure and open the door for a deeper correction. Meanwhile, former supports at 0.7070 and 0.7100 have reverted to resistance and are expected to cap any recovery attempts.

Res: 0.7050; 0.7070; 0.7100; 0.7119
Sup: 0.7016; 0.7000; 0.6953; 0.6922