AUD/USD Price Forecast: Wavers around 0.6950 with bearish momentum fading
- AUD/USD wavers around 0.6950 with the immediate bullish trend in play.
- The US Dollar remains on the defensive on Monday, despite rising geopolitical tensions.
- The Aussie Dollar has broken above the descending trendline resistance.
The Australian Dollar (AUD) posts marginal losses against the US Dollar (USD) on Monday, as the pair's reversal from Friday's 0.6970 highs found support above 0.6120. Rising tensions in Iran have hammered risk appetite, but the US Dollar’s weakness is keeping the Aussie from retreating further.
US and Iran escalated hostilities over the weekend, and Tehran announced the closure of the Strait of Hormuz, boosting Crude prices. This adds pressure to central banks to hike interest rates in order to contain inflation, in a context of sluggish global growth.
The Aussie, however, is drawing some support from the US dollar’s weakness. Risk aversion has failed to support the Greenback on Monday, as investors await the US Consumer Price Index (CPI) release, due on Tuesday, and the testimony of Federal Reserve (Fed) Chairman Kevin Warsh to the US Congress.
Technical Analysis: Aussie breaks the descending trendline
AUD/USD trades at 0.6941, holding a constructive near-term bias after breaking and confirming above the trendline resistance from early June highs. The four-hour Relative Strength Index is trading back and forth around 50, while the Moving Average Convergence Divergence (MACD) hovers near the zero line, highlighting a lack of a clear bias.
On the topside, Bulls need to break Friday's highs, in the 0.6970 area and the 38.2% Fibonacci retracement of the May-June selloff, at 0.7020, to confirm a bullish reversal and target the Mid June highs around 0.7085. On the downside, session lows at 0.6923 are likely to provide some support ahead of the broken trendline, at 0.6880 and the June 30 low at 0.6865.
(The technical analysis of this story was written with the help of an AI tool. Know more.)