The will not defend their crown after crashing out of the tournament in an astonishing penalty shootout in the last 16 as Sweden pulled off a famous smash-and-grab.
Although the USA produced their best display since touching down in Australia and dictated the contest, they could not find a way past the superb Zecira Musovic as the game finished 0-0 before losing the contest on penalties.
Lina Hurtig’s winning spot-kick created a moment that will go down in history, with USA goalkeeper Alyssa Naeher appearing to have saved the attempt only for the ball to drift back over the line.
There was initially confusion in the stadium while referee Stephanie Frappart consulted with VAR, with goal-line technology revealing that the ball had crossed the line by the smallest of margins.
After a long pause, Frappart blew her whistle and confirmed that the penalty had been scored as Hurtig was mobbed by her team-mates and Sweden will now face Japan in the quarter-finals.
Holders USA, who had never previously exited the tournament before the semi-final stage, went into the match after three underwhelming performances in the group stages – drawing two of them – but gave a much-improved display in Melbourne on Sunday.
They dominated possession and chances in the first half against the No.3 ranked side in the world and came closest to finding a breakthrough when Lindsey Horan powered a header against the crossbar in the 35th minute.
Sweden, who strolled into the knockout stages with maximum points, only mustered one attempt on goal in the first 45 minutes and had just three touches in the USA’s penalty box.
That pattern continued after the restart and Horan once again went close to opening the scoring, latching onto a low cross into the box and rifling an effort towards the far corner that was brilliantly pawed away by Musovic.
Lyon star Horan, playing just behind Alex Morgan, was central to all of the defending champions’ best attacking play, pulling strings and working openings, while Sweden’s threat seemed limited to set-pieces.
It was not until the 85th minute that the Scandinavians had their first shot on target in the match, with Sofia Jakobsson firing an effort straight down the throat of Naeher after a quick break.
As happened against Portugal, when the USA were the width of the post away from being knocked out, the holders looked a little nervy as the seconds ticked away but almost grabbed a late winner only for Morgan to be denied by another excellent save from Musovic as the match went to extra-time.
Sweden enjoyed a rare period of pressure when the game got back underway, bombarding the USA box with crosses, though they were again indebted to Musovic who prevented Morgan from scoring on the break.
The four-time champions quickly re-took control and substitute Lynn Williams forced Musovic into another fine save with a low shot towards the far corner before Sophia Smith also made the Chelsea goalkeeper work with a near-post attempt.
Sweden’s stubborn rearguard ultimately held firm despite facing 22 shots, with the tie going to penalties. After five excellent finishes, Nathalie Bjorn and Megan Rapinoe both missed back-to-back penalties before Rebecka Blomqvist’s effort was saved.
That gave Smith the chance to seal USA’s passage to the quarter-finals but she also skied her effort high over the bar. A thumping finish from Hanna Bennison put the pressure back on the States but goalkeeper Naeher stepped up and smashed the ball down the middle of goal.
Centre-back Magdalena Eriksson then found the top corner for Sweden before the experienced Kelley O’Hara hit the post with an awful, scuffed effort.
Up stepped substitute Hurtig with a historic victory up for grabs – which resulted in a truly astonishing moment. The spot-kick was saved initially but the ball appeared to spin back behind the line before being clawed out by Naeher.
After a long pause, goal-line technology declared that the whole ball had crossed the line to spark wild scenes of celebration from Sweden and tears from a USA squad who had been targeting a three-peat. Naeher was furious, but it is the Swedes who will take on Japan in the next round.
In the day’s earlier match, the Netherlands booked a quarter-final showdown against Spain after surviving a number of scares of their own in a 2-0 win over South Africa.
The Dutch opened the scoring in the ninth minute from a corner, with Manchester City’s new club-record signing Jill Roord heading in from close range, but they were indebted to goalkeeper Daphne van Domselaar for maintaining their narrow lead.
Banyana Banyana had a number of excellent opportunities to level the scores and were particularly dangerous on the break, but some calamitous goalkeeping saw Lineth Beerensteyn wrap up the win.
The 26-year-old Juventus forward raced towards goal and hit a tame effort from 20 yards straight at Kaylin Swart, who somehow managed to let the ball float through her grasp and into the back of the net.
The Netherlands will now take on Spain in Wellington on Friday for a place in the semi-finals but will be without midfielder Danielle van de Donk, who picked up a second yellow card of the tournament and is now suspended.
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