- AUD/USD falls to its lowest level since Feb. 2016 on Friday.
- US Dollar Index loses traction in the early NA session.
- The pair is still down more than 50 pips on the week.
After touching its lowest level since February of 2016 at 0.7020, the AUD/USD pair staged a modest recovery and was last seen trading at 0.7045, where it was still down 0.48% on a daily basis.
Since the start of the week, the selling pressure surrounding the European currencies has helped the greenback find demand and the first half of the day on Friday painted a similar picture. The US Dollar Index, which tracks the value of the dollar against a basket of six major currencies, rose to its highest level since mid-August at 96.86.
However, the greenback started to lose its bullish momentum in the early NA session to help the pair pull away from its lows. The first estimate of the third quarter real GDP growth edged down to 3.5% from 4.2% recorded in the second quarter. Although this reading came in above the market expectation of 3.3%, the DXY failed to push higher and was last seen at 94.75, where it was still up 0.15% on the daily basis.
If Wall Street reacts positively to the data and continues to rise, the risk-sensitive AUD could continue to retrace its downside. For the week, however, the pair is still down around 70 pips.
Technical levels to consider
The initial resistance for the pair could be seen at 0.7090 (20-DMA) ahead of 0.7150 (50-DMA) and 0.7200 (Oct. 3 high). On the downside, supports align at 0.7020 (daily low), 0.7000 (psychological level) and 0.6940 (Jan. 25 low).
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