The AUDUSD has dropped after hitting a resistance level in a target area. The highs from yesterday and today stopped at a key point that indicated a potential shift in bullish momentum. Sellers took advantage of this area to halt the rally. This pullback has caused the 100-hour moving average to align with the price at 0.6663. The recent low has bounced off this level, which is vital for short-term strategies for both buyers and sellers. If the price breaks below this level, we might see further declines, with the next targets being the 200-hour moving average and last Friday’s low at 0.6628.

Sellers Regaining Control

For sellers to take control, these levels must be broken. On the other hand, if support holds, buyers will still be in charge, looking at the range between 0.66817 and 0.6694 as their next goal. The AUD/USD rally has stopped near a key resistance area we’ve been tracking, including swing highs from 2024. This inability to push higher hints that bullish momentum is fading. As a result, the price has corrected lower, making the next few weeks crucial for direction. This technical weakness coincides with fundamental pressures we’re observing. Recent US jobs data showed a surprising gain of 210,000 in Non-Farm Payrolls, strengthening the Federal Reserve’s commitment to keeping rates high. This strong US dollar is creating a significant challenge for the AUD/USD pair. On the Australian side, things appear softer. Last month’s CPI data indicated annual inflation has dropped to 3.1%, prompting a more cautious approach from the Reserve Bank of Australia. Plus, iron ore prices have fallen below $110 per ton due to concerns about Chinese demand, putting more pressure on the Aussie dollar. We noticed a similar situation in late 2023 when differing Fed and RBA policies pushed the pair lower.

Derivative Trading Strategies

For those trading derivatives, the rising 100-hour moving average at 0.6663 is the immediate pivot point. If the price breaks below this level, it could signal an opportunity to buy put options or set up bearish option spreads, aiming for a deeper correction based on both technical breaks and fundamental factors. If sellers gain control and push below 0.6663, the major support zone to watch will be around 0.6628. This aligns with the 200-hour moving average and would be the next target for bearish positions. A move toward this level would confirm that the recent rally has completely reversed. However, if support at 0.6663 holds, it will indicate that buyers are still in control. In that case, traders might consider short-term call options, aiming to retest the resistance between 0.66817 and 0.6694. This scenario seems less likely given the current fundamental challenges. Create your live VT Markets account and start trading now.

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