AUD/USD Price Analysis: Bears have the upper hand below 0.6900 mark/50% Fibo.

• AUD/USD drops to a two-week low on Friday amid strong follow-through USD buying.
• The risk-off impulse exerts additional downward pressure on the risk-sensitive aussie.
• Bearish traders now await weakness below the monthly low before placing fresh bets.

The AUD/USD pair extends its recent sharp rejection slide from a technically significant 200-day SMA and drifts lower for the fifth successive day on Friday. The downward trajectory drags spot prices to a two-week low, around the 0.6875 region during the mid-European session.

The US dollar prolongs its bullish trend witnessed over the past one-and-a-half week or so and climbs to a one-month high on the last day of the week. This turns out to be a key factor that continues to exert downward pressure on the AUD/USD pair. Adding to this, recession fears trigger a fresh wave of the global risk-aversion trade and further contribute to driving flows away from the perceived riskier aussie.

From a technical perspective, acceptance below the 50% Fibonacci retracement level of the July-August recovery move from over two-year low favour bearish traders. The negative outlook is reinforced by bearish oscillators on the daily chart, which are still far from being in the oversold territory. That said, failure to find acceptance below the 50-day SMA warrants some caution before positioning for a further slide.

Hence, some follow-through selling below the monthly swing low, around the 0.6870-0.6865 region, which coincides with the 61.8% Fibo. level, is needed to confirm a fresh bearish breakdown. The AUD/USD pair might then test the 0.6800 mark and eventually drop to the 0.6765 horizontal zone. The bearish trend could extend towards the 0.6700 round figure en-route the YTD low, around the 0.6680 region touched on July 14.

On the flip side, any meaningful recovery above the 50% Fibo. level could now be seen as a selling opportunity and remain capped near the overnight swing high, around the 0.6970 area. The latter coincides with the 38.2% Fibo. level and is followed by the 0.7000 psychological mark. A convincing break through the said barriers would negate the near-term negative outlook and trigger a short-covering move.

AUD/USD daily chart

Key levels to watch