AUDUSD recovers after support at 100-day MA holds

After the FOMC rate decision, AUDUSD dropped sharply. However, the selling pressure began to ease as the price hit a key technical support zone.

The fall reached roughly 0.7078, a point where two important technical indicators converged:

• The rising 100-day moving average at 0.70795
• The 50% retracement of the move up from the end-of-July low at 0.70773

When multiple technical indicators point to roughly the same price, that region often draws increased trader interest. Some market participants watch the moving average, others the retracement level. When both align, a stronger support or resistance zone can be formed.

Here, the combined levels effectively slowed the drop. Sellers had their opportunity after the FOMC meeting, but they failed to maintain the move below the support cluster. As bearish momentum waned, shorts began covering and buyers stepped in.

This pushed the pair back upward.

The Australian dollar is also getting a lift from fundamental factors.

The recovery isn't solely technical.

US Treasury yields declined on the day, diminishing some backing for the greenback. Meanwhile, commodity prices, such as gold and silver, climbed strongly.

The Aussie tends to be responsive to commodity moves, as Australia is a big commodity producer and exporter. Rising commodity prices can boost the outlook for export earnings and bolster demand for the currency.

That correlation isn't flawless each day, but when US yields drop, the dollar weakens and commodities strengthen together, it creates a favorable environment for AUDUSD.

The fundamental backdrop gave buyers a rationale to buy. The technical zone near 0.7077–0.7080 provided a clear level to operate from.

The significance of the 100-day moving average

Long-term traders and investors use the 100-day moving average as a gauge of the overall trend.

When the price sits above a rising 100-day MA, buyers tend to hold more long-term control. If the price drops below and remains under that level, the bias tilts toward sellers.

The crucial point is not just a brief trade above or below the moving average. Markets can momentarily cross technical levels, particularly after a big event like an FOMC decision.

What counts is whether the price can hold below and gain bearish momentum.

On Wednesday, sellers drove AUDUSD down to the 100-day MA, but they couldn't push further. The inability to extend the break allowed buyers to regain the upper hand.

Buyers enhance the near-term outlook

The recovery accelerated once AUDUSD climbed back above 0.70908 and then 0.71017.

Those breakouts mattered because they indicated the upward move was more than a brief bounce from support. Buyers reclaimed consecutive technical levels and compelled short-term bears to reconsider.

Now, 0.71017 serves as a key near-term gauge for traders.

Remaining above that point keeps the short-term lean toward buyers and lets the upward correction persist. A drop back below 0.71017 would start to sap the recovery's steam.

Under that, 0.70908 becomes the next downside target. If both levels are breached, focus returns to the main support zone from 0.70773 to 0.70795.

The upcoming resistance zone is the true challenge

Even though buyers have recaptured some short-term control, further work lies ahead.

The next significant resistance lies roughly between 0.71168 and 0.71270.

That region includes multiple technical levels:

• The 38.2% retracement at 0.71168
• A prior swing area extending toward 0.71270
• The falling 100-hour moving average near 0.71271

After the recent drop, the 100-hour MA has been declining. This makes it a short-term trend benchmark and a logical objective for buyers.

A sliding moving average typically draws sellers at the first test, as those who missed the initial fall may use the bounce to get short. Buyers from the lows might also book profits as price nears resistance.

That doesn't imply the price can't rise above the MA. It means buyers must show they can break above and hold to gain stronger technical command.

What would turn the outlook more bullish?

A sustained break above the 0.71168–0.71270 resistance zone would be the next bullish cue.

That would push the price above the 38.2% retracement, the prior swing zone and the falling 100-hour MA. Overcoming all three would hand buyers greater control and boost the chances of a larger rebound.

Until then, the recovery is encouraging but unfinished.

Buyers successfully held longer-term support around the 100-day moving average. They have also retaken multiple short-term levels. Now they must prove they can push through the resistance gathering near 0.71168–0.71270.

What could undermine the recovery?

If AUDUSD fails to clear resistance and retreats below 0.71017, some bullish steam would dissipate.

A dip under 0.70908 would increase bearish pressure and bring the major support at 0.70773–0.70795 back into focus.

That zone stays the key downside indicator. As long as price holds above, buyers can claim the larger uptrend is still in play. A sustained breach of both the 100-day MA and the 50% retracement would be more bearish and hand back control to sellers.

What traders can learn from this

This price action illustrates why traders should identify technical levels ahead of volatility spikes.

The FOMC decision sparked the drop, but technical levels pinpointed where selling pressure could ease. Traders didn't need to guess where buyers might appear. The 100-day MA and the 50% retracement formed a well-defined support zone.

Moving averages and retracement levels can help traders define their bias, manage risk and determine levels that would confirm or invalidate a trade idea.

Here, sellers tested the long-term support but couldn't hold price below. Buyers reacted and lifted the pair back above short-term resistance.

Now the onus moves to buyers. They must hold price above 0.71017 and eventually break through the 0.71168–0.71270 resistance to strengthen their hold.