The AUD/USD currency pair gained positive traction on Thursday, reversing a three-day losing streak that had taken it to the 0.7075 area, which marked a nearly one-month low the previous day. During the first half of the European session, spot prices remained above the 0.7100 mark, registering a 0.30% increase for the day [1].
The rebound in AUD/USD was supported by a modest pullback in US bond yields, triggered by US Federal Reserve Chair Kevin Warsh’s focus on inflation, which helped calm the recent selloff in the fixed-income market. This led to some profit-taking in the US Dollar (USD). Additionally, market expectations that the Reserve Bank of Australia (RBA) will raise interest rates later this month provided further support to the Australian Dollar [1].
However, the upside for AUD/USD appears capped due to the Fed's hawkish outlook, which signals one more rate hike this year, and ongoing inflation risks from higher oil prices. Escalating tensions in the Middle East are also maintaining a geopolitical risk premium, which supports the safe-haven USD and limits further gains for the AUD/USD pair [1].
From a technical perspective, AUD/USD climbed back above the 38.2% Fibonacci retracement level of the June-September upswing after showing resilience below the 100-day Simple Moving Average (SMA). While buyers retain control, momentum indicators such as the daily Relative Strength Index (RSI) at 45.6 and a negative, contracting MACD suggest that upside pressure is waning rather than reversing decisively. Immediate resistance is seen at the 23.6% Fibonacci retracement at 0.7150, with a break above exposing the recent swing high at 0.7238. On the downside, support levels are noted at 0.7095 (38.2% Fibo.), 0.7051 (50.0% Fibo.), and 0.7007 (61.8% Fibo.), with deeper corrective risks toward 0.6945 and 0.6865 if these are breached [1].
In terms of broader currency moves, the US Dollar was down 0.35% against both the Australian Dollar and the New Zealand Dollar, and was the strongest against the Canadian Dollar on the day [1].
CONCLUSION
AUD/USD has rebounded above 0.7100, supported by a softer USD and expectations of an RBA rate hike. However, a hawkish Fed outlook and geopolitical risks are likely to cap further gains. Technical indicators suggest the pair may face resistance ahead, with key support levels to watch if downside resumes.