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AUD/USD bounces off multi-day low, climbs to 0.6925-30 region amid modest USD downtick

  • AUD/USD reverses an intraday dip to sub-0.6900 levels amid a modest USD downtick.
  • Hawkish Fed expectations to limit the USD fall and cap the pair amid the risk-off mood.
  • Traders might also prefer to wait for the release of the crucial US CPI report on Tuesday.

The AUD/USD pair attracts some buyers near the 0.6890 area and recovers around 40 pips from a four-day low touched earlier this Monday. Spot prices climb to the 0.6930 area, or a fresh daily top during the early European session and for now, seems to have stalled last week's pullback from levels just above the 0.7000 psychological mark.

The US Dollar struggles to capitalize on its intraday gains amid a modest downtick in the US Treasury bond yields and turns out to be a key factor lending some support to the AUD/USD pair. That said, the prospects for further policy tightening by the Fed should help limit the downside for the USD. This, along with the prevalent risk-off environment, warrants caution before positioning for any meaningful upside for the risk-sensitive Aussie.

Several FOMC members, including Fed Chair Jerome Powell, last week stressed the need for additional interest rate hikes to fully gain control of inflation. The bets were boosted by the Labor Department's annual revisions of CPI data on Friday, which showed that consumer prices rose in December instead of falling as previously estimated. Furthermore, the University of Michigan survey's one-year inflation expectations climbed to 4.2% for February.

This raises the risk of higher inflation print for January and reaffirms expectations that the Fed will stick to its hawkish stance. This, in turn, might hold back traders from placing bearish bets around the USD ahead of the latest US consumer inflation figures, due for release on Tuesday. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside and any subsequent move up might still be seen as a selling opportunity.

There isn't any major market-moving economic data due for release from the US on Monday, leaving the USD at the mercy of the US bond yields. Traders will further take cues from Fed Governor Michelle Bowman's scheduled speech later during the early North American session. This, along with the broader risk sentiment, could influence the USD price dynamics and contribute to producing short-term trading opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price0.6926
Today Daily Change0.0007
Today Daily Change %0.10
Today daily open0.6919
 
Trends
Daily SMA200.7001
Daily SMA500.6869
Daily SMA1000.6684
Daily SMA2000.6806
 
Levels
Previous Daily High0.696
Previous Daily Low0.6909
Previous Weekly High0.7011
Previous Weekly Low0.6856
Previous Monthly High0.7143
Previous Monthly Low0.6688
Daily Fibonacci 38.2%0.6929
Daily Fibonacci 61.8%0.6941
Daily Pivot Point S10.6899
Daily Pivot Point S20.6878
Daily Pivot Point S30.6848
Daily Pivot Point R10.695
Daily Pivot Point R20.6981
Daily Pivot Point R30.7001

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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