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Potential Bearish Breakdown Could Pave the Way for a Deeper Technical Correction
Forex
Economic
Summary:
A resurgence in negative histogram depth would likely serve as the final catalyst for a structural breakdown below 0.6955.
Sell
TradingAUDUSD
EXP
0.69424
Entry Price
0.67670
TP
0.70250
SL
0.69143 -0.00318 -0.46%
0
Point
Flat
0.67670
TP
CLOSING
0.69424
Entry Price
0.70250
SL
On Wednesday, Australian inflationary data provided a measure of relief for domestic households as the Consumer Price Index (CPI) exhibited a slight deceleration, retreating from 3.8% to 3.7% year-over-year. Despite this welcome cooling, the figure remains stubbornly above the Reserve Bank of Australia’s (RBA) 3% target. Furthermore, the trimmed mean CPI—a preferred gauge of underlying inflation—held steady at 3.3% year-over-year, aligning with January’s downwardly revised reading.
The fundamental backdrop remains complicated by regional volatility. RBA Deputy Governor Christopher Kent observed that the conflict in Iran has tightened global financial conditions, emphasizing that supply-side shocks represent a primary risk to the inflationary outlook. Kent noted that while central banks cannot directly resolve supply disruptions, they must remain vigilant to ensure that initial price spikes do not manifest as long-term inflationary expectations or prolonged price pressures. This follows the RBA’s narrow decision last week to elevate the cash rate to 4.1%—a move Governor Michele Bullock characterized as a matter of strategic timing rather than a fundamental shift in policy stance.
In the Middle East, the geopolitical impasse continues. Israel’s Channel 12 reported on Tuesday that the United States has formally proposed a one-month truce. This initiative features a comprehensive 15-point framework aimed at de-escalating regional hostilities through significant concessions, including renewed restrictions on Iran's nuclear program and ironclad guarantees for navigation through the Strait of Hormuz in exchange for the gradual lifting of economic sanctions.
However, Tehran has largely dismissed the proposal. On Wednesday, state-affiliated Press TV reported that Iran remains committed to ending the conflict only on its own strategic terms. A high-ranking security official asserted that the nation “will not allow Trump to dictate the conclusion of the war,” maintaining that any final accord is strictly contingent upon the fulfillment of Iranian demands. These prerequisites include a total cessation of military strikes, war reparations, and formal recognition of Iranian sovereignty over the Strait of Hormuz.
Simultaneously, the United States continues to grapple with persistent inflationary hurdles. Import prices surged in February by 1.3%—the most significant increase since March 2022—driven primarily by rising energy costs prior to the regional conflict. This figure substantially outperformed market forecasts of a 0.5% advance. Compounding these concerns, S&P Global recently noted that U.S. enterprises faced elevated input costs throughout March, exacerbated by volatile energy expenditures and ongoing supply chain bottlenecks.
Technical Analysis
From a technical perspective, AUD/USD has initiated a downward impulse that is currently testing a critical support floor at the 0.6955 handle. Should the pair achieve a decisive daily close beneath this level, it would likely open the door to a fresh bearish leg, potentially extending the technical correction toward the secondary support zone at 0.6767.
Our analysis of momentum oscillators supports this downside bias. The RSI is currently hovering at the 35 level; while approaching oversold territory, it maintains sufficient "runway" compared to historical extremes to allow for further depreciation. Meanwhile, the MACD histogram reflects a degree of market indecision, yet the signal lines remain entrenched well below the neutral threshold.
A resurgence in negative histogram depth would likely serve as the final catalyst for a structural breakdown below 0.6955. Traders should monitor the signal lines closely, as a sustained move further into the negative zone would confirm that the path of least resistance remains to the downside.
Trading Recommendations
Trading direction: Sell
Entry price: 0.6941
Target price: 0.6767
Stop loss: 0.7025
Validity: May 03, 2026 15:00:00
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