**AUD/USD Drops Steeply: Market Dynamics, Technical Analysis, and Broader Implications**
*Adapted and expanded from Adam Button, ForexLive, as published on TradingView News; additional insights included for comprehensive coverage.*
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### Overview: Volatility Strikes the Australian Dollar
The Australian Dollar (AUD) experienced dramatic losses against the US Dollar (USD) today, with the AUD/USD pair relinquishing all its earlier gains and plunging back towards its prior lows. This movement encapsulates a round-trip journey, a phenomenon forex traders often describe as “completing the lap”—when a currency pair rises solidly only to return fully to its starting point within the same session or a short period. While the immediate causes can be attributed to specific news events and technical breakouts, the wider context involves macroeconomic factors, central bank policy expectations, and shifting market sentiment.
This article will delve into:
– The day’s trading activity in AUD/USD, with a focus on intraday volatility
– Technical analysis, examining key chart levels and price action
– The broader economic and policy backdrop impacting AUD/USD
– Outlook and possible scenarios for the currency pair
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### Intraday Price Action: From Highs to Lows
#### Sharp Price Movement
– At the session’s outset, AUD/USD gathered momentum, carrying forward a bullish sentiment from improved global risk appetite and overnight data.
– However, as the US session began, selling pressure intensified. The pair fell precipitously from the day’s highs, essentially erasing all prior gains.
– By the afternoon, AUD/USD was trading sharply lower, returning to levels seen before the most recent rally, and even testing support at previous session lows.
#### Key Numbers
– **Daily High:** AUD/USD touched 0.6714 before reversing direction
– **Current Level:** As of the latest update, the pair is trading around 0.6643, reflecting a loss on the day of nearly 0.8 percent
– **Range:** The swing represented a move of over 70 pips intraday
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### Technical Analysis: Charting the Round-trip
#### Significant Chart Levels
– **Initial Resistance:** The prior day’s high near 0.6714 proved too formidable, capping the rebound.
– **Support Zone:** Strong buying interest had previously emerged around the mid-0.6600s, offering some stabilization, but this level now faces renewed tests.
– **Moving Averages:** Intraday reversal coincided with the 50-period moving average on the 4-hour chart, which acted as a dynamic barrier.
– **Fibonacci Levels:** The reversal also lined up with the 61.8 percent retracement of the previous upswing from May.
#### Price Patterns
– **Engulfing Candle:** The day’s activity left a bearish engulfing pattern on the daily chart, usually a strong sign of further weakness from a technical perspective.
– **Volume Surge:** There was a notable increase in trade
Read more on AUD/USD trading.