Selling AUDUSD with 0.70500 target as profit-taking and fundamental pressures mount

The AUDUSD pair has backed off from its May 4 peak at 0.72288 and is now trading at around 0.71544. A sudden flare-up in Strait of Hormuz tensions is the main factor driving the sell-off. Attempts to settle the matter by force, coupled with retaliatory strikes, have thrown risk appetite into a tailspin, sparking a mad dash for the dollar as the world's favorite financial bunker. 

Adding to the pressure, a few hours earlier, the Reserve Bank of Australia (RBA) pulled the trigger on a third interest rate hike, bringing it to 4.35% as the market had fully anticipated. But here's the kicker: the accompanying forecast turned out to be far more alarming than anyone expected. According to the latest reports, the regulator sees inflation peaking at 4.8% in the second quarter of 2026, GDP growth slumping below potential, and unemployment creeping up to 4.7% by mid-2028. Now that monetary tightening is old news, investors are laser-focused on economic risks. The RBA openly admits that sky-high energy costs are squeezing real incomes and eating into consumption. To make matters worse, its baseline forecast hinges on a quick resolution to the conflict—a very uncertain scenario. This time around, a classic "buy the rumor, sell the fact" trap is clearly working against the Aussie.

For the Australian dollar to find genuine support, the conflict in the Strait of Hormuz would need to cool off quickly, allowing shipping lanes to reopen. At the moment, however, this prospect is still a long shot.

Turn to the charts and you'll find out that AUDUSD is in the midst of a corrective pullback after hitting the 0.72288 ceiling. Bollinger Bands are tightening, signaling a volatility squeeze and a big move on the horizon. Concurrently, heavy trading volumes during the ascent and descent tell a loud and clear story: market participants are cashing out after the recent rally.

For those looking to act, pay attention to the trading plan down below:

Sell AUDUSD at the current price. Place Take profit at 0.7050. Set Stop loss at 0.7240.

This forecast holds true from May 5 till May 12, 2026.