AUD/USD drops to 10-day lows under 0.7100

• US dollar adds to gains across the board on American hours.
• AUD/USD remains under pressure, testing 0.7100.

The AUD/USD dropped further during the American session as cautions prevails across financial markets following Ukraine’s invasion. The pair bottomed at 0.7094, hitting the lowest level since February 14. It then rebounded rising back above 0.7100, although still remains under pressure.

The greenback continues to be the top performer, boosted by risk aversion. The DXY is up by 1.30%, at the highest since 2020. On American hours, US yields moved to the upside, giving more strength to dollar’s rally. The US 10-year yield rose to 1.95% and the 30-year to 2.26%.

US economic data came in above expectations. Initial and continuing claims dropped more than expected to 232K and 1.47M, respectably. Q4 GDP growth was revised higher from an annualized rate of 6.9% to 7%. New Home Sales fell to 801K. Market participants ignored US data as the focus remains in the Ukraine invasion and price action across financial markets.

Levels to watch

The sharp reversal in AUD/USD leaves the pair vulnerable to more losses in the short term. A consolidation under 0.7100, would clear the way for a test of the 0.7045/50 area (Feb 4 low). On the upside, a recovery above 0.7165 should alleviate the bearish pressure. Only a daily close above 0.7235 would suggest more gains ahead.

Technical levels