Analysis of AUD/USD: Exchange Rate Falls to Early May Low

As indicated by the 4-hour AUD/USD chart today:

→ the rate fell below 0.652, a level last seen on May 2;

→ the RSI indicator dropped below 15, a level last seen during the panic over the spread of COVID-19 in spring 2020.

The weakening of the Australian dollar could be linked to participants' expectations of upcoming news:

→ the US Core PCE Price Index will be published today at 15:30 GMT+3;

→ next week, Australian inflation data and the Federal Reserve's interest rate decision (both events scheduled for Wednesday) will be released.

Is further decline in the AUD/USD rate possible?

It is possible that the release of significant news could trigger a surge in volatility, causing the AUD/USD rate to fall below the recent monthly low of 0.652.

However, technical analysis of the AUD/USD chart suggests a potential recovery scenario:

→ The sequence of local extremes in the first half of 2024 forms a structure resembling a narrowing triangle. It appears the central axis is around 0.0665, and the bounce from low B indicates support from the Support 1 line.

→ Therefore, it is reasonable to assume that, in the context of increased volatility in the forex market, the AUD/USD rate has significantly deviated from the average values around 0.0665. At current quotes, some participants might want to lock in profits from short positions and/or position themselves for a short-term recovery of the "Aussie" from the oversold zone, following a 4% drop from A to B in 10 days.

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