The AUD/USD currency pair touched a one-and-a-half-week low around the 0.7140 region during the Asian session on Monday, trading just above the mid-0.7100s and down nearly 0.25% for the day [1]. This decline follows last week's US inflation figures, which reaffirmed market expectations for an imminent interest rate hike by the US Federal Reserve later this week [1]. Additionally, rising geopolitical tensions, particularly the US-Iran standoff and clashes in the Strait of Hormuz, have bolstered the safe-haven US Dollar, further weighing on the AUD/USD pair [1].
Despite these pressures, hawkish expectations for the Reserve Bank of Australia (RBA) have helped limit the downside for the Australian Dollar [1]. From a technical perspective, the breakdown below the 100-period Simple Moving Average (SMA) on the 4-hour chart last week was a key trigger for AUD/USD bears. However, the pair has shown resilience below the 23.6% Fibonacci retracement at 0.7150, with the Relative Strength Index (RSI) near 30 indicating oversold conditions that could slow further downside [1]. The Moving Average Convergence Divergence (MACD) indicator remains negative, suggesting fading momentum in the latest slide [1].
If the pair accepts a move below the 23.6% retracement, it could pave the way for a deeper fall to the 38.2% Fibonacci level at 0.7095 and the 50% retracement at 0.7051, which are seen as progressively stronger demand zones if selling resumes [1]. On the upside, immediate resistance is at the 100-period SMA at 0.7179, with a subsequent barrier at the recent cycle high near 0.7239. Only a sustained break above this upper band would ease the current bearish tone [1].
Over the past seven days, the US Dollar has strengthened against most major currencies, including a 1.59% gain against the New Zealand Dollar and a 0.65% gain against the Canadian Dollar. Against the Australian Dollar, the USD has appreciated by 0.65% [1].
CONCLUSION
The AUD/USD pair is under pressure from US rate hike expectations and geopolitical tensions, but hawkish RBA sentiment is providing some support. Technical indicators suggest the pair may be oversold, potentially slowing further declines. Market participants should watch for a break below key Fibonacci levels or above resistance to signal the next directional move.