• AUD/USD drifts lower on Thursday and snaps a four-day winning streak to a multi-year peak.
• Rising Middle East tensions continue to underpin the USD and exert pressure on spot prices.
• Bets for an imminent RBA rate hike next week could limit losses amid a bullish technical setup.

The AUD/USD pair attracts some sellers during the Asian session on Thursday, and for now, seems to have snapped a four-day winning streak to its highest level since June 2022, around the 0.7185 region, touched the previous day. Spot prices currently trade around the 0.7130 area, down 0.30% for the day, though the downside potential seems limited.

A further escalation of the military conflict between Israel, US forces, and Iran tempers investors' appetite for riskier assets, and benefits the safe-haven US Dollar (USD). Moreover, a fresh leg up in Crude Oil prices fuels inflationary concerns and dim hopes for near-term interest rate cuts by the US Federal Reserve (Fed). The outlook, in turn, continues to push the US Treasury bond yields higher and further underpins the USD, exerting downward pressure on the AUD/USD pair.

Meanwhile, hawkish comments from the Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser earlier this week forced traders to bring forward expectations for a second-rate hike as early as next week. This, in turn, might continue to act as a tailwind for the Australian Dollar (AUD) and help limit deeper losses for the AUD/USD pair. Hence, it will be prudent to wait for strong follow-through selling before confirming that spot prices have topped out in the near term.

From a technical perspective, the currency pair showed some resilience below the 200-period Exponential Moving Average (EMA) on the 4-hour chart earlier this week. A subsequent move beyond the 0.7130 horizontal barrier was seen as a fresh trigger for the AUD/USD bulls, suggesting that the corrective pullback could be seen as a buying opportunity. Moreover, the Relative Strength Index (RSI) near 55 stays above its midline, aligning with a modest bullish outlook.

The Moving Average Convergence Divergence (MACD) indicator, on the other hand, has cooled from recent highs but remains marginally positive. The histogram has been contracting, indicating a loss of immediate buying pressure rather than an outright reversal. Furthermore, the MACD line is still above the signal line, suggesting fading yet intact upside momentum. Initial support emerges around 0.7120, guarding a deeper pullback toward 0.7080 and then the 0.7040 area.

The latter nears the previous reaction lows that align ahead of the 200-period EMA on the 4-hour chart. A sustained break below 0.7040 would expose the psychological 0.7000 handle as the next bearish target.

On the upside, immediate resistance sits at 0.7150, with a break opening the way toward 0.7175 and then the 0.7220 region. As long as AUD/USD defends support above 0.7080, the technical path favors gradual gains toward the upper resistance band.

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

AUD/USD 4-hour chart