AUD Strength Triggers Sharp Decline in AUD/USD Amidst Hawkish Fed Hints

The AUD/USD currency pair has been experiencing a sharp decline due to dollar strength, driven by rising Treasury yields and increasing bets on further interest rate hikes. This trend is expected to continue in the near term, with the Greenback reaching a two-month high on Thursday.

Market participants are closely watching trade outcomes from the summit between U.S. President Donald Trump and Chinese President Xi Jinping, which could boost global risk appetite and put upward pressure on the Australian dollar. The Reserve Bank of Australia's (RBA) expected rate hike next week is also a key factor in shaping market sentiment.

The AUD/USD pair has formed a death cross, with the 50-day moving average crossing below the 200-day MA, indicating a new downtrend. The first immediate support level to watch is around the psychological 0.7000 area, which aligns with a late July peak and early July trough.