AUD/USD Price Analysis: Weakness below mid-0.7400s paves the way for further decline

• AUD/USD extended its recent pullback from the YTD high and dropped to a near three-week low.
• Acceptance below 0.7500 and the subsequent decline has shifted bias in favour of bearish traders.
• Attempted recovery moves could attract fresh selling and remain capped near the 0.7535-40 area.

The AUD/USD pair extended this week's sharp retracement slide from the YTD peak - levels just above mid-0.7600s - and witnessed some selling for the third successive day on Friday. The downward trajectory dragged spot prices to a two-and-half-week low, around the 0.7440-0.7435 region during the early North American session.

More hawkish FOMC minutes, along with the continuous rise in the US Treasury bond yields, pushed the US dollar to its highest level since May 2020. This, in turn, was seen as a key factor that exerted downward pressure on the AUD/USD pair. Bulls seemed unimpressed by a positive risk tone, which tends to benefit the perceived riskier aussie.

The ongoing decline suggests that Tuesday's post-RBA strong move beyond an ascending channel extending from the YTD low was a false breakout. Some follow-through selling below the 0.7500 mark might have already shifted the bias in favour of bearish traders. A subsequent break through the 0.7450 horizontal support zone reaffirms the negative outlook.

Hence, the corrective pullback seems more likely to get extended towards the 0.7400 round-figure mark before the AUD/USD pair eventual drops to the 0.7375-0.7370 area. The next relevant support is pegged near the 0.7300 confluence region, comprising the very important 200-day SMA and the lower boundary of the aforementioned trend channel.

On the flip side, the 0.7500 mark now seems to act as immediate strong resistance. Any further recovery could attract fresh selling and remain capped near the 0.7535-0.7545 zone. Sustained strength beyond should allow the AUD/USD pair to reclaim the 0.7600 mark, which coincides with the channel resistance and act as a pivotal point.

AUD/USD daily chart

Key levels to watch