- AUD/USD is held up on the downside at a critical support structure.
- The focus is now on whether the US dollar gives back some ground before completing a 5-wave technical move to the upside.
AUD/USD has been in the hands of the bears all the way to a critical support area and the focus now is on the correction pertaining to the USD.
At the time of writing, AUD/USD is trading at 0.7018 at the start of the new Asian day.
Yesterday's latest economic data from Australia showed the damage done from the renewed lockdowns in Melbourne and regional Victoria.
The ABS’s preliminary estimate of retail sales for August shows a drop of 4.2% m/m. This doesn’t come as a surprise, and the initial reaction was muted.
However, over the course pf the rest of the day, the Aussie buckled on the strength of the greenback.
Sales were down 12.6% m/m in Victoria. Spending elsewhere in Australia was down 1.5% m/m.
The looming reduction of JobKeeper and JobSeeker payments, as well as the first raft of mortgage deferral expiries, may be keeping households more cautious than they were in previous months,
analysts at ANZ bank said.
Risk sentiment supports the bullish case for USD
Meanwhile, risk sentiment tumbled again on Wednesday. Wall Street's stocks were more than undoing yesterday's rebound.
DXY continued to trek higher (+0.4%), gaining ground vs. all its G10 peers. Commodity currencies led declines with the Aussie now down some 3.75% since the last swing high.
AUD/USD & DXY price analysis
Meanwhile, from a technical point of view, there is now scope for a short term correction on the charts.
First, looking to the DXY, what can we see?
-637364946394355812.png)
We can see a 3-wave move that has the potential to transpire into a 5-wave move.
This gives some breathing space to the Aussie that rhymes perfectly with a correction from the current structure to a 38.2% Fibonacci retracement as follows:
-637364947169733559.png)
Overall, however, the outlook, from a technical standpoint, is bullish for the greenback:
-637364947578522475.png)
As can be seen, the upside potential for DXY is compelling towards a 61.8% Fibonacci retracement at around 95.50.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold falls amid a possible de-escalation of US-China tensions Premium
Gold pulled back from its all-time high of $3,500 per troy ounce reached earlier on Tuesday, as a resurgent US Dollar and signs of easing tensions in the US–China trade dispute appeared to draw sellers back into the market.
EUR/USD retreats to daily lows near 1.1440
EUR/USD loses the grip and retreats to the 1.1440 zone as the Greenback’s rebound now gathers extra steam, particulalry after some positive headlines pointing to mitigating trade concerns on the US-China front on Tuesday.
GBP/USD deflates to weekly lows near 1.3350
GBP/USD loses further momentum and recedes to the 1.3350 zone on Tuesday, or two-day troughs, all in response to the frmer tone in the US Dollar and encouraging news from the US-China trade scenario.
3% of Bitcoin supply in control of firms with BTC on balance sheets: The good, bad and ugly
Bitcoin disappointed traders with lackluster performance in 2025, hitting the $100,000 milestone and consolidating under the milestone thereafter. Bitcoin rallied past $88,000 early on Monday, the dominant token eyes the $90,000 level.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.