FxWirePro : AUD/USD drifts lower, could be on verge of bigger drop

• AUD/USD slipped on Friday as the U.S. dollar gained support from rising expectations of further Federal Reserve rate hikes.

• The greenback has been on a sustained upswing since the Fed’s unexpectedly hawkish turn last week, with markets now pricing a 75% likelihood of a rate increase in September.

• In contrast, investors have scaled back expectations for further Australian rate hikes as the pullback in oil prices is expected to ease inflationary pressures..

•While core inflation edged up in May, analysts now think inflation for the whole second quarter will undershoot the Reserve Bank of Australia's forecast of 3.8%.

• Markets imply just a 50% chance of a further rise in the 4.35% cash rate, and are actually flirting with the prospect of rate cuts in the second half of 2027.

•  Immediate resistance is located at 0.6936 (38.2%fib), any close above will push the pair towards 0.7029(50%fib).

•  Support is seen at 0.6867(Lower BB) and break below could take the pair towards 0.6806(23.6%fib).

 Recommendation: Good to sell  around 0.7000 with stop loss of 0.7120 and target price of 0.6850