AUD/USD changed course on Mester’s cautious take on interest rates

Omkar Godbole FXStreet Contributor

The offered tone around the US dollar strengthened, pushing AUD/USD higher to 0.77 handle after Cleveland Fed’s Mester sounded slightly cautious on interest rates.

Mester said the central bank does not intend to surprise markets, which underscored the fact that the Fed is more market dependent than data dependent. Mester also cited uncertainty on fiscal slide and uncertainty in the global economy.

Her comments essentially mean that March rate hike is off the table and the central bank would not move unless markets are comfortable - rate hike bets are well above 60%.

The AUD/USD pair turned changed course and rose to 0.7698 from the session low of 0.7666. Data released earlier today showed China home prices rose in fewest cities in 12 months amid curbs. However, Mester’s comments helped the Aussie dollar erase losses.

AUD/USD Technical Levels

The spot was last seen trading around 0.7692. An intraday break above 0.77 could yield a break above 0.7632 (recent high) and a rally to 0.7750 (rising wedge resistance). A more sustained rally to 0.7778 (Nov 8 high) - 0.78 (zero figure) could be seen following a daily close above 0.77.

On the other hand, a breakdown of support at 0.7666 (session low) would open doors for a pullback to 0.7600 (zero figure), under which a major support is seen directly at 0.7609 (Jan 24 high).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Overbought	Low
1H	Bearish	Neutral	High
4H	Bearish	Neutral	Low
1D	Bearish	Neutral	Low
1W	Bearish	Neutral	Expanding
Updated Feb 20, 05:30 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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