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AUD/USD retreated from its earlier session high after surging over 1% on Wednesday, closing near 0.7050 as initial gains were partially unwound. The pair failed to hold above the 0.7100 psychological level amid fading optimism surrounding a potential ceasefire in the Middle East, which had previously driven the rally. Traders are now assessing whether the pair can stabilize above 0.7050 or if further declines are imminent.
The move highlights the sensitivity of the AUD/USD to geopolitical risk sentiment, as the Australian dollar often reacts to developments in the Middle East due to its reliance on commodity exports. For forex traders, the pair's inability to hold key resistance levels underscores the importance of monitoring geopolitical developments and their impact on risk appetite. A breakdown below 0.7050 could open the door for renewed bearish momentum, while a rebound above 0.7100 might signal renewed buying interest.
Looking ahead, traders should watch for follow-through selling below 0.7050, which could target 0.7000 as the next major support. Conversely, a sustained move above 0.7100 would validate the bullish case. Broader market factors like the RBA's policy outlook and USD strength against other majors will also influence the pair's trajectory.
