AUD/USD: Choppy hourly sideways consolidation in mixed sentiment, bulls testing key hourly resistance


  • AUD/USD is moving in on the key hourly resistance. 
  • Risk sentiment remains positive and unhinged by yield curve inversions. 
  • Ukraine & Russian peace talks take precedence and lift market spirits. 

At 0.7510, AUD/USD is attempting to move higher as it takes on a wall of resistance near 0.7520. The price has travelled from a low of 0.7456 to a high of 0.7518 so far.

The risk sentiment is making for a better environment for the high beta currency as US stocks climb on Tuesday, lifted by signs of progress in peace talks between Russia and Ukraine. However, the US Treasury yield curve has flashed warning signs for the economy as curves invert, keeping a lid on the risk-on mood. 

Moscow has decided to drastically cut military activity around Kyiv and northern Ukraine, while Ukraine proposed adopting a neutral status but with international guarantees that it would be protected from attack. This was something telegraphed by Financial Times Monday which had already led to an improved risk-on environment before Aussie Retail Sales beat expectations and started to lift the currency also. 

Retail Sales increased by 1.8% MoM in February, resulting in annual growth of 9.1% YoY. The strong monthly result was driven by social spending, which recovered as Omicron caution dissipated in most states, analysts at ANZ Bank said. ''Strong discretionary spending in February is a good sign of household financial wellbeing ahead of intensifying inflation.''

Meanwhile, the Reserve Bank of Australia's tightening expectations continues to rise. ''WIRP suggests liftoff is fully priced in for the June 7 meeting now.  At the beginning of March, liftoff was priced in for the August 2 meeting,'' analysts at Brown Brothers Harriman argued. 

''Swaps market sees 225 bp of tightening over the next 12 months and another 125 bp over the following 12 months that would see the policy rate peak near 3.75%, up from 3.5% at the start of the week. ''

The analysts noted that AUD is nearing a test of the October high near 0.7555. ''A break above that would set up a test of the May 2021 high near 0.7890.  it is the best performing major YTD, followed by NOK, CAD, and NZD.''

US recession on the cards? 

In the US, there are worries that a recession is on the way as the US 5s30s curve has inverted for the first time since 2006 and the 2s10s curve has inverted for the first time since 2019 as the market prices in faster rate hikes.

''Historically, a US recession tends to follow a year after the curve inverts, though the variance is large and there are occasional false positives,'' analysts at TD Securities said, adding:

''The 10y-2y curve, which is another common metric, implies a 37% probability of recession within a year and a 43% probability one- to two-years ahead at current levels. The 30y-5y curve has actually moved in the opposite direction of late, with current levels suggesting a 19% recession chance in one- to two- years.''

Ukraine & Russian peace talks

Meanwhile, during the highly anticipated start of fresh peace talks, Russia promised on Tuesday to scale down military operations around Ukraine's capital and north, while Kyiv proposed Ukraine join the EU while adopting neutral status by not joining NATO. 

The peace talks are taking place in an Istanbul palace more than a month into the largest attack on a European nation since World War II. 

''Talks successful enough for a possible meeting between Putin and Zelensky, says Ukrainian presidential advisor Mykhailo Podolyak. “We have documents prepared now which allow the presidents to meet on a bilateral basis," he said.

Nevertheless, Russia's top negotiator said that there is still a long way to go until a mutually acceptable agreement with Ukraine is reached and de-escalation around Kyiv and Chernihiv does not mean a cease-fire. British Prime Minister Boris Johnson said a ceasefire agreement in Ukraine will not be enough to lift British sanctions against Russia. US president, in the same vein, says that the US will keep sanctions.

Looking ahead for the week, US Nonfarm Payrolls data will take centre stage as a meanwhile distraction to the Ukraine crisis this Friday. ''Employment likely continued to advance in March following two strong reports averaging +580k in Jan and Feb,'' analysts at TD Securities said. 

''That said, we expect some of that boost to fizzle, though to a still firm job growth pace of +350k. Indeed, job gains should lead to a new drop in the unemployment rate to a post-COVID low of 3.7%. We also expect wage growth to slow to a still firm 0.3% MoM pace.''

AUD/USD

Overview
Today last price 0.7508
Today Daily Change 0.0018
Today Daily Change % 0.24
Today daily open 0.749
 
Trends
Daily SMA20 0.7358
Daily SMA50 0.7237
Daily SMA100 0.7219
Daily SMA200 0.73
 
Levels
Previous Daily High 0.7541
Previous Daily Low 0.7466
Previous Weekly High 0.7537
Previous Weekly Low 0.7372
Previous Monthly High 0.7286
Previous Monthly Low 0.7032
Daily Fibonacci 38.2% 0.7494
Daily Fibonacci 61.8% 0.7512
Daily Pivot Point S1 0.7457
Daily Pivot Point S2 0.7423
Daily Pivot Point S3 0.7381
Daily Pivot Point R1 0.7532
Daily Pivot Point R2 0.7574
Daily Pivot Point R3 0.7608

 

 

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD: A tough barrier remains around 0.6800

AUD/USD: A tough barrier remains around 0.6800

AUD/USD failed to maintain the earlier surpass of the 0.6800 barrier, eventually succumbing to the late rebound in the Greenback following the Fed’s decision to lower its interest rates by50 bps.

AUD/USD News
EUR/USD still targets the 2024 peaks around 1.1200

EUR/USD still targets the 2024 peaks around 1.1200

EUR/USD added to Tuesday’s losses after the post-FOMC rebound in the US Dollar prompted the pair to give away earlier gains to three-week highs in the 1.1185-1.1190 band.

EUR/USD News
Gold surrenders gains and drops to weekly lows near $2,550

Gold surrenders gains and drops to weekly lows near $2,550

Gold prices reverses the initial uptick to record highs around the $$2,600 per ounce troy, coming under renewed downside pressure and revisiting the $2,550 zone amidst the late recovery in the US Dollar.

Gold News
Ethereum could rally to $2,817 following Fed's 50 bps rate cut

Ethereum could rally to $2,817 following Fed's 50 bps rate cut

Ethereum (ETH) is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's (Fed) decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds (ETF) recorded $15.1 million in outflows.

Read more
UK CPI set to grow at stable 2.2% in August ahead of BoE meeting

UK CPI set to grow at stable 2.2% in August ahead of BoE meeting

The United Kingdom Office for National Statistics will release August Consumer Price Index figures on Wednesday. Inflation, as measured by the CPI, is one of the main factors on which the Bank of England bases its monetary policy decision, meaning the data is considered a major mover of the Pound Sterling.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Forex MAJORS

Cryptocurrencies

Signatures