The dollar is continuing its rampaging form as the post-FOMC dip has been rather short-lived. AUD/USD saw a bounce then to test its 100-day moving average (red line) but that was where sellers leaned on to produce a comeback and we're now seeing price test waters below 0.7000 for the first time since the end of January.
The 0.7000 level is a rather pivotal one for the pair as a break below signifies more of a psychological break alongside being a technical one. From the latter perspective, it leaves very little in the way of a push towards the 50.0 retracement level of the pandemic rally @ 0.6757 next. That's quite some room to drop for the pair from current levels.
The RBA is slowly looking to be more hawkish but as things stand, they may approach rate hikes with a more level-headed manner whereas the Fed looks to be staying all out aggressive. Until the latter changes, it may be tough to fight against the deleveraging trade and if markets are selling off everywhere, the dollar will remain king.
Going back to AUD/USD , this is the major level to watch. If buyers can hold at 0.7000, it does allow for some potential to bounce later on. But the way I see it, it is going to be a real test of their resolve as dollar bulls continue to hammer home their point. It really does feel like it is just a matter of time before the level breaks down.
