Aussie Dollar Plummets to Seven-Week Low on Fed Inflation Fears

The Aussie dollar hit a seven-week low on Wednesday as investors bet that the Federal Reserve will take more aggressive action to combat inflation.

The AUDUSD pair fell over 1% in sharp acceleration lower, putting it on track for its biggest daily loss since June 23. This decline comes as oil prices continue to rise, fueling expectations of higher inflation and prompting investors to anticipate a policy tightening cycle from the Fed.

Important supports at the 0.7070 zone, which converges with the 55/100 day moving averages (DMAs), were violated, completing a bearish failure swing pattern on the daily chart and generating a bearish signal that increases prospects for further losses.

Bears are eyeing targets at 0.7016, which is the 200 DMA, as well as 0.7007, a Fibonacci retracement of 61.8% and the base of the daily cloud. Predominantly bearish daily studies support this scenario, with falling Tenkan/Kijun-sen lines diverging after a bear cross formation and negative momentum strengthening.