AUD/USD battles 0.7600 during a bounce off five-week low, eyes RBA’s Lowe
|- AUD/USD keeps corrective pullback from 0.7562, the lowest since December 28.
- US dollar gains amid progressing stimulus talks, receding market frenzy.
- RBA’s dovish halt, extended QE added strength to the bearish moves.
- Aussie Building Permits, speech from RBA’s Lowe and China’s Caixin Services PMI are the key.
AUD/USD buyers attack 0.7600 in the latest recovery moves from a six-week low during the initial Asian trading session on Wednesday. The quote dropped the lowest in 2021 the previous day amid dovish RBA and strong US dollar. The traders currently await a speech from the RBA Governor Philip Lowe to confirm Tuesday’s bearish bias of the Reserve Bank of Australia’s (RBA).
King dollar dominates...
Although retail traders’ rush towards equities and then for silver faded off-late, the US dollar managed to remain strong across the board as the White House policymakers, including US President Joe Biden progress in the much-awaited stimulus package. It should be noted that the Democratic push for the budget resolution, which doesn’t require Republican support to get the aid package through the Senate, adds strength to the expectations.
Also supporting the moves could be downbeat European growth figures and global market expectations of a recovery in the US jobs report ahead of Friday’s key jobs report.
On the contrary, the Australian dollar dropped after the RBA showed concerns for inflation and business credit growth while announcing no change to its benchmark interest rate of 0.10%. Though, the Aussie central bank did announce the continuation of $5 billion a week bond purchases beyond its current expiry of mid-April.
Amid these plays, Wall Street benchmarks rose over 1.0% while the US 10-year Treasury yields also grew 2 basis points (bps) to 1.2% by the end of Tuesday’s North American trading.
Moving on, risk catalysts will be the key while Australia’s Building Permits for December, with prior 2.6% MoM, followed by RBA Governor Lowe’s speech can offer intermediate moves to the AUD/USD traders. Also, China’s Caixin Services PMI, expected 51.1 versus 56.3 prior, may offer extra directives. Should Lowe reiterates his bullish bias, the quote can extend the latest corrective pullback towards nearby resistances.
Technical analysis
50-day SMA and a one-week-old resistance line, respectively around 0.7610 and 0.7620, challenge AUD/USD recovery. Meanwhile, December 21 low near 0.7460 lures the sellers.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.