• AUD/USD stages a modest recovery from a two-week low, around 0.7100, touched on Wednesday.
• The Fed’s hawkish tilt and Iran tensions continue to underpin the USD, warranting caution for bulls.
• The technical setup suggests that any further move up is likely to be sold into and remain capped.

The AUD/USD pair gains some positive traction during the Asian session on Thursday and recovers a part of the previous day's heavy losses to the 0.7100 mark, or a two-week low.

Expectations that the Reserve Bank of Australia (RBA) will stick to its hawkish stance counter China's mixed official PMIs and turn out to be a key factor offering some support to the Australian Dollar (AUD). The US Dollar (USD), on the other hand, sticks to its positive tone near the highest level since April 13 on the back of persistent geopolitical uncertainties stemming from stalled US-Iran peace talks. Furthermore, diminishing odds for any further policy easing by the US Federal Reserve (Fed) underpin the USD and should cap the upside for the AUD/USD pair.

From a technical perspective, spot prices have repeatedly failed to find acceptance above the 0.7200 mark and have oscillated in a range over the past two weeks or so. Meanwhile, the overnight slide confirms a breakdown below the 0.7130-0.7125 confluence – comprising the 100-period Simple Moving Average (SMA) on the 4-hour chart and the 23.6% Fibonacci retracement level of the recent recovery from the year-to-date low touched in March. This, in turn, favors the AUD/USD bears, suggesting that the move higher might now be seen as a selling opportunity.

Moreover, the Relative Strength Index (RSI) holds around 40 and hints at modest bearish momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) is in negative territory but flattening, suggesting downside pressure is softening rather than accelerating.

In the meantime, immediate resistance emerges at the 23.6% Fibonacci retracement at 0.7131, with a stronger barrier at the recent cycle high near 0.7223. On the downside, initial support aligns with the 0.7100 mark ahead of the 38.2% retracement at 0.7074. This is followed by the 50.0% level at 0.7027 and deeper supports at the 61.8% and 78.6% retracements at 0.6981 and 0.6915, respectively, where buyers would likely attempt to slow any extended pullback.

(The technical analysis of this story was written with the help of an AI tool.)

AUD/USD 4-hour chart