- AUD/USD fell to a fresh multi-week low for the second day in a row.
- Risk aversion and weak iron ore demand outlook weighed on the resource-bound Australian dollar.
- Fed rate hike bets lifted the dollar and contributed to an intraday selling bias of the Aussie.
The AUD/USD price continued to slide in the European session, falling to fresh multi-week lows and approaching 0.7300.
–Are you interested in learning more about forex bonuses? Check our detailed guide-
Decreased demand for iron
The resource-rich Australian economy is under pressure due to fears that China’s attempts to curb steel production in 2022 could significantly dampen demand for iron ore. Following this, US dollar buying on Friday put downward pressure on AUDUSD for the second consecutive day.
Hawkish Fed looking for 50-bps hike
Fed Chair Jerome Powell confirmed expectations of faster Fed tightening on Thursday, restoring the dollar to a one-week low. Powell said the upcoming May 3-4 FOMC meeting would discuss a 50 basis point rate hike. He also hinted at multiple increases this year.
Markets responded quickly, pricing in three consecutive 50 basis point rate hikes, which led to the rate-sensitive 5-year US Treasury bonds rising above 3% for the first time since 2018. A sell-off in the US continued gaining markets on Friday, which boosted the safe-haven dollar in combination with risk aversion.
What’s next to watch for AUD/USD price?
Before settling for further declines, it would be prudent to wait for a sustained break below the key support near the round 0.7300. Traders are now awaiting the release of US PMI data, which, along with US bond yields, are expected to weigh on the US dollar and support the AUD/USD pair.
AUD/USD price technical analysis: Bears to pounce 0.7300
The AUD/USD price is strongly bearish after breaking below the 0.7340 support zone. The key SMAs on the 4-hour chart are also pointing at further losses. The bear’s key hurdle is to break the 0.7300 psychological mark. In case of a breakout, the pair will head towards the 0.7250 area ahead of the 0.7200 level. Alternatively, in case of a bounce back, the pair will find resistance at 0.7340 ahead of 0.7400 and then 0.7450.
–Are you interested in learning more about ETF brokers? Check our detailed guide-
The volume data shows clues for strong bears as the volume bars for the downside price wave increase. Therefore, it is prudent to look for a selling opportunity if the price attempts to recover.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Share
Saqib Iqbal
