|

AUD/USD aims to reclaim 0.6980 as weak yields weigh USD Index

  • AUD/USD is looking to recapture the critical resistance of 0.6980 as USD Index has dropped.
  • Weaker US Treasury yields are weighing on the US Dollar Index.
  • Morgan Stanley has revised the interest rate peak for the Fed at 5.25%.

The AUD/USD pair has turned sideways after a gradual upside move above 0.6960 in the early European session. The Aussie asset is struggling to extend gains amid an absence of a potential trigger for a power-pack action in the market.

S&P500 futures have recovered losses shown in the Asian session, but are struggling to add more gains ahead. The risk-taking ability of the market participants is not improving as recent commentary from US President Joe Biden over an altercation with China, while addressing the State of the Union (SOTU), has triggered caution. Broadly, the market mood seems extremely quiet.

The US Dollar Index (DXY) has remained extremely quiet at 103.00 but is showing signs of further weakness as US Treasury yields have accepted negative traction. The USD Index is expected to witness a sheer fall after surrendering the immediate support of 102.90. Meanwhile, the 10-year US Treasury yields have dropped to near 3.65%.

The commentary from Federal Reserve (Fed) chair Jerome Powell has completely vanished the odds of a pause in the policy tightening spell by the Fed. After a slowdown in December’s consumer spending data, economic activities, and the Producer Price Index (PPI) data, the street started betting that the Fed will avoid increasing interest rates further.

While January’s report of US Nonfarm Payrolls (NFP) has turned the table in the favor of a hawkish policy stance. The latest forecast from Morgan Stanley states 25 basis points (bps) rate hike expectation for the March meeting after a strong US jobs report on Friday, before conveying hopes of a 25 bps Fed rate hike in May following Powell’s speech.

The same brings Morgan Stanley’s expectation for the peak rate to 5.00% to 5.25% as per the latest forecasts.

Meanwhile, the Australian Dollar is also expecting further interest rate hikes by the Reserve Bank of Australia (RBA) as the Australian economy has not shown any meaningful signs of a decline in inflationary pressures.

AUD/USD

Overview
Today last price0.6966
Today Daily Change0.0015
Today Daily Change %0.22
Today daily open0.6951
 
Trends
Daily SMA200.7005
Daily SMA500.6862
Daily SMA1000.6674
Daily SMA2000.6809
 
Levels
Previous Daily High0.6989
Previous Daily Low0.6879
Previous Weekly High0.7158
Previous Weekly Low0.6919
Previous Monthly High0.7143
Previous Monthly Low0.6688
Daily Fibonacci 38.2%0.6947
Daily Fibonacci 61.8%0.6921
Daily Pivot Point S10.6891
Daily Pivot Point S20.683
Daily Pivot Point S30.6781
Daily Pivot Point R10.7
Daily Pivot Point R20.7049
Daily Pivot Point R30.7109

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

More from Sagar Dua
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD eases toward 1.1700 as USD finds fresh demand

EUR/USD eases toward the 1.1700 mark in Europe trading on Friday. The pair faces headwinds from a renewed uptick in the US Dollar as investors look past softer US inflation data. However, the EUR/USD downside appears capped by expectations of the Fed-ECB monetary policy divergence. 

GBP/USD steadies below 1.3400 as traders digest BoE policy update and US inflation data

The GBP/USD pair stalls the previous day's pullback from the vicinity of mid-1.3400s and a nearly two-month high, though it struggles to attract meaningful buyers during the Asian session on Friday. Spot prices currently trade around the 1.3380-1.3385 region, up only 0.05% for the day, amid mixed cues.

Gold stays weak below $4,350 as USD bulls shrug off softer US CPI

Gold holds the previous day's late pullback from the vicinity of the record high and stays in the red below $4,350 in the European session on Friday. The US CPI report released on Thursday pointed to cooling inflationary pressures, but the US Dollar seems resilient amid a fresh bout of short-covering.

Bitcoin, Ethereum and Ripple correction slide as BoJ rate decision weighs on sentiment

Bitcoin, Ethereum, and Ripple are extending their correction phases after losing nearly 3%, 8%, and 10%, respectively, through Friday. The pullback phase is further strengthened as the upcoming Bank of Japan’s rate decision on Friday weighs on risk sentiment, with BTC breaking key support, ETH deepening weekly losses, and XRP sliding to multi-month lows.

How much can one month of soft inflation change the Fed’s mind?

One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures. 

Ethereum Price Forecast: EF outlines ways to solve growing state issues

Ethereum price today: $2,920. The EF noted that Ethereum's growing state could lead to centralization and weaken censorship resistance. The Stateless Consensus team outlined state expiry, state archive and partial statelessness as potential solutions to the growing state load.