AUD/USD Extends Losses Amid Mounting Bearish Dynamics

Market Overview

During Tuesday’s trading session, Asian and Oceanian currencies, particularly the Australian dollar (AUD), faced notable declines. The U.S. dollar remained resilient near its four-month high, benefiting from the ongoing risk-averse sentiment across Asian markets. Despite a moderate improvement in Australia’s business sentiment index, the prevailing pessimism weighed heavily on the AUD, offering only fleeting support. Consequently, AUD/USD extended its losses, with bearish momentum firmly dictating the market direction.

The broader market sentiment continues to disfavor risk assets like the AUD, driven by persistent strength in the U.S. dollar. Expectations around the Federal Reserve’s continued commitment to a tight monetary policy have further exacerbated negative sentiment, diminishing the appeal of high-risk currencies such as the Australian dollar.

Technical Analysis

On the 4-hour chart, AUD/USD has maintained its downward trajectory, decisively breaking below the weekly support level at 0.65579. This break has paved the way for further declines, with the next immediate support target at 0.65470. Should bearish control persist, the subsequent downside objectives are at 0.65331, 0.65178, and 0.65012. Each support level represents a critical inflection point, where a breach could accelerate the bearish continuation.

Momentum indicators further substantiate the bearish outlook. The RSI remains entrenched in a declining pattern, indicating that market conditions are not yet oversold, thereby allowing room for additional downside movement. Similarly, the MACD continues to drift lower beneath its signal line, underscoring the sustained bearish momentum. The pair’s positioning below significant moving averages reinforces the prevailing negative sentiment and highlights the lack of buying interest.

In an alternative scenario, if buyers manage to regain control and push the price above 0.65579, the immediate focus would shift to the resistance level at 0.65980. A breakout above this level could signal a potential shift in momentum, suggesting a possible reversal of the current bearish trend.

Key Technical Levels Overview

Resistance Levels:

• Resistance 1: 0.65579
• Resistance 2: 0.65980

Current Price: 0.65473

Support Levels:

• Support 1: 0.65470
• Support 2: 0.65331
• Support 3: 0.65178
• Support 4: 0.65012

Key Events to Monitor

Traders should closely monitor upcoming speeches by Federal Reserve members Thomas Barkin and Neel Kashkari, as these may provide further clarity on the Fed’s future policy direction. However, the primary market-moving event for AUD/USD remains the release of U.S. inflation data on Wednesday. Given the current bearish sentiment, any surprises in the inflation report could trigger significant volatility in the U.S. dollar, directly impacting AUD/USD dynamics.

Conclusion

AUD/USD continues to extend its losses, breaking through key support levels amid sustained bearish sentiment. Market participants will now look to U.S. inflation data and commentary from Fed officials as critical determinants of the pair’s near-term direction.