The AUD/USD pair retraced its gains during the Wednesday trading session, approaching the crucial 0.65 support level. 

• The Australian dollar experienced a decline against the US dollar on Wednesday, signaling a potential move towards a significant support level.
• This development has attracted the attention of many market participants.

The AUD/USD pair price retraced its gains during the Wednesday trading session, approaching the crucial 0.65 support level. The slight rebound observed suggests that buyers may be eyeing this level with anticipation. Whether it will hold remains uncertain, but historical price action suggests that this region has acted both as support and resistance in the past, making it a key reference point for market sentiment.

The concept of market memory plays a crucial role in this scenario. Traders often remember price levels where significant market activity occurred, and this collective memory can influence future trading decisions. Therefore, it would not be surprising if market sentiment were to shift around the 0.65 level. After all, this is an area that we have been looking at for some time.

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Technical Analysis

Another critical factor to monitor is the 200-day Exponential Moving Average positioned near the 0.66 level. Crossing this EMA could signify a change in momentum, potentially driving the currency pair towards the 0.67 level. This level is considered a fair value within the current trading range, which extends from 0.65 to 0.69.

However, should the pair break below the 0.65 level, it could enter a bearish phase. A potential target for downward movement might be the 0.6350 level, which has historically attracted buyers. It's worth noting that the Australian dollar's performance is closely linked to commodity markets, so keeping an eye on commodity price movements is crucial. Additionally, global risk appetite can also influence the Australian dollar's performance. When investors show an inclination towards riskier assets, the Aussie dollar tends to benefit. Conversely, during times of risk aversion when investors sell risk-related assets, the US dollar often gains strength, and commodity currencies like the Australian dollar can face selling pressure.

In the end, the Australian dollar's recent pullback against the US dollar has brought attention to key support and resistance levels. Market memory and the 200-day EMA near 0.66 are factors to watch closely, as they could impact the currency pair's future direction. Commodity market movements and global risk sentiment will also play a significant role in determining the Australian dollar's performance in the coming days.

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