The AUD/USD currency pair faced rejection near the 100-day Simple Moving Average (SMA) at the 0.7050 level, retreating slightly after reaching a fresh high since June 17 earlier this Monday. Spot prices slid to the 0.7030-0.7025 region heading into the European session, although downside potential appears limited due to a supportive fundamental and technical setup [1].
The US Dollar staged a recovery from a one-and-a-half-month low, exerting pressure on the AUD/USD pair, alongside the disappointing release of China's Manufacturing PMI. However, renewed hopes for a US-Iran peace deal and receding US Federal Reserve rate hike bets, amid easing inflation fears driven by a steep decline in oil prices, are expected to cap the USD and help limit the downside for the currency pair [1].
Technically, last week's breakout through the 0.7020 barrier, representing the 38.2% Fibonacci retracement level of the May-June downfall, was seen as a key trigger for AUD/USD bulls. Momentum indicators remain supportive, with the Relative Strength Index hovering around 57 and the MACD slightly positive, suggesting buyers still control the short-term bias despite facing resistance at the 100-day SMA (0.7053) and the 50.0% retracement at 0.7069. A daily close above these levels could open the way toward the 61.8% retracement at 0.7117 and then 0.7184, ahead of the cycle high near 0.7271 [1].
On the downside, initial support aligns with the 38.2% retracement at 0.7021, with further support at 0.6962 and the 200-day SMA at 0.6913. A deeper retreat would expose the structural floor around 0.6867 [1].
CONCLUSION
The AUD/USD pair is currently facing resistance near key technical levels but maintains a bullish bias supported by positive momentum indicators. While external factors such as US Dollar strength and weak Chinese data are exerting pressure, easing inflation fears and receding Fed rate hike bets are helping to limit downside risks. Market participants are watching for a daily close above resistance levels to confirm further upside potential.