During the Asian session on Wednesday, the AUD/USD pair faced new selling pressure, erasing much of the gains achieved the previous day. Despite this setback, the currency pair remained within a well-established trading range, holding steady above the critical 0.7150 level.
Recent economic data indicated that Australia’s economy expanded by only 0.3% in the first quarter of 2026, a sharp decline from the 0.8% growth recorded in the final quarter of 2025. This figure fell short of the anticipated 0.5% increase, raising concerns among economists. Compounding the situation, consumer inflation figures were also weaker than expected, and the unemployment rate surged to its highest point in over four years as of April. These developments have diminished expectations for an interest rate hike by the Reserve Bank of Australia (RBA) in June, further weighing on the Australian Dollar (AUD).
Adding to the pressure on the AUD was the latest data from China, which showed a robust Services PMI. However, this positive news was overshadowed by ongoing uncertainty surrounding US-Iran peace negotiations and expectations for a hawkish stance from the US Federal Reserve (Fed), which bolstered the US Dollar (USD) and contributed to the downward movement in the AUD/USD pair.
Nonetheless, the absence of significant follow-through selling indicates the need for caution before making any further bearish bets on the currency pair. From a technical standpoint, the spot prices maintain a constructive near-term outlook as they stay above the 50-day Simple Moving Average (SMA). This is complemented by several Fibonacci retracement levels that are seen as layers of support. The Relative Strength Index (RSI) is situated just above the neutral area, indicating some underlying buying interest, but the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting that while there is some upward potential, it is not yet strong.
The mixed technical indicators imply that if the AUD/USD falls below the 23.6% Fibonacci retracement level from the March to May upswing, currently around 0.7165, it is likely to find ample support near the 50-day SMA at 0.7118. Should a more substantial decline occur, support near the 38.2% retracement at 0.7102 may come into play. On the upside, a notable resistance level lies at the recent high near 0.7267, and a daily close above this mark would shift the bullish sentiment and potentially pave the way for further gains.
In terms of overall performance, the Australian Dollar showed varied results against major currencies, standing out as the strongest against the New Zealand Dollar. The latest figures revealed a range of percentage changes for the AUD against other currencies, further illustrating the dynamics impacting global forex markets amid shifting economic indicators and geopolitical developments.
