The USD/AUD pair experienced a turbulent week of trading, characterized by a sharp mid-week divergence that saw the US Dollar test significant lows before staging a robust recovery. Opening the week with relative stability, the pair faced intense selling pressure on Wednesday (Feb 11), dropping to test the critical 1.4000 psychological floor—a move that likely triggered stop-losses for many traders. However, the subsequent rebound into the weekend suggests that demand for the Greenback remains intact, framing this week’s price action as a classic “bear trap” within a broader consolidation pattern.

The Mid-Week Plunge

The defining moment of the week occurred between Wednesday and Thursday, where the pair diverged sharply from its opening levels of ~1.4150. As seen in the 5-day chart, the exchange rate plummeted, piercing through interim support levels to bottom out near the 1.4000 handle. This aggressive move downwards brought the pair dangerously close to the lower bounds of its 52-week range (1.3991), suggesting a potential breakdown was in play. Analysts likely attributed this move to short-term flows or a temporary shift in risk sentiment favoring the Aussie Dollar, though the lack of follow-through selling indicated that bears were unable to sustain momentum below the crucial support zone.

Friday’s V-Shaped Recovery

Friday’s session (Feb 13) proved pivotal for the bulls. Following a period of consolidation on Thursday, the pair initiated a sharp vertical rally, erasing nearly all the losses sustained earlier in the week. The price action climbed steadily from the 1.4030 lows, breaking back above the 1.4100 threshold and hitting intraday highs near 1.4150 before settling at 1.4129. This +0.16% daily gain on Friday was instrumental in salvaging the weekly candle, effectively painting a “hammer” or reversal pattern on the charts. Such a strong rejection of lower prices often signals that the market views the 1.4000 level as a “value zone” for buying US Dollars.

Technical Context & Market Outlook

The recovery leaves the pair trading comfortably in the middle of its recent range. The 52-week range of 1.3991 – 1.6883 highlights that while the USD is historically cheap against the AUD relative to the past year, it is struggling to find the momentum needed for a breakout toward 1.45. The defense of the 1.4000 level is a technically bullish development; however, the inability to hold above 1.4150 at the close suggests that overhead resistance remains formidable. Traders will now be looking to see if the pair can establish a higher low next week, which would confirm a shift in momentum.

Looking ahead, investors should monitor whether the USD/AUD can sustain a foothold above 1.4150. A break above this level could open the door for a run toward 1.4250. Conversely, if the 1.41 handle fails to hold, we may see a retest of the 1.4000 support, with a break below that level bringing the 52-week lows of 1.3991 back into focus. Next week’s macroeconomic calendar will be critical in determining the catalyst for the next major leg of movement.