The AUD/USD pair is showing early-week weakness against the US dollar, with the pair breaking below the lower boundary of a significant ascending channel that has been in place since December 2025.
Key Drivers Behind the Downward Move:
→ The US dollar’s appeal as a safe-haven currency has strengthened amid heightened military tensions in the Middle East. US President Donald Trump has warned of strikes on Iranian power infrastructure if the Strait of Hormuz remains closed, while Tehran has threatened counterattacks on critical US and Israeli assets.
→ Asian stock markets have retreated, reacting to potential energy supply disruptions from the region. Given Australia’s strong trade links with China, this puts additional pressure on the Australian dollar.
→ Market participants are positioning ahead of Wednesday’s inflation data, with expectations influencing short-term price movements.
Technical Overview of AUD/USD
On 24 February, analysis confirmed the continuing relevance of the ascending channel. Key observations included:
→ signs of weakening as highs A and B formed;
→ a possible breakdown below the channel’s median, targeting the psychological 0.7000 level.
The pair failed to surpass high B and dropped into the channel’s lower half in early March. On 3 March, AUD/USD briefly pierced 0.7000 but quickly rebounded, indicating strong underlying demand.
Nevertheless, the market’s weakness around highs A and B remained. From 10–12 March, bulls attempted to reclaim these levels but could not sustain a move above the recent peak. Viewed through the Smart Money Concept framework, this resembles a liquidity grab in the buy-side liquidity (BSL) zone, signalling bearish intent.
In the short term, a rebound from the March low near 0.6950 is possible. Looking further ahead, traders should consider:
→ the 0.7000 level potentially acting as resistance;
→ the continuation of a downward trajectory within a clearly emerging descending channel.
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