- AUD/USD gained some positive traction on Tuesday amid a modest USD weakness.
- A combination of factors might act as a tailwind for the USD and cap gains for the pair.
- Acceptance above the 0.7315-20 resistance zone supports prospects for further gains.
The AUD/USD pair built on its steady intraday ascent and climbed to the 0.7365 region, back closer to four-week tops during the early part of the European session.
The pair attracted some dip-buying on Tuesday and now looks to build on last week's breakout through the 0.7315-20 horizontal resistance zone. The uptick was exclusively sponsored by a modest US dollar weakness, though lacked bullish conviction and warrants some caution before positioning for any further appreciating move.
Expectations that the Fed remains on track to begin rolling back its massive pandemic-era stimulus and the possibility for an interest rate hike in 2022 should act as a tailwind for the greenback. This, along with a generally softer risk tone, might hold investors from placing aggressive bullish bets around the perceived riskier aussie.
Investors remain worried that the recent surge in crude oil/energy prices could stoke inflation. This comes on the back of signs of a slowdown in the global economic recovery and has been fueling concerns about stagflation. Apart from this, fears of a spillover from China Evergrand's debt crisis took its toll on the global risk sentiment.
From a technical perspective, acceptance above the 0.7315-20 resistance breakpoint favours bullish traders and supports prospects for additional gains. Some follow-through buying beyond the overnight swing highs, around the 0.7375 region, will reaffirm the positive outlook and allow push the AUD/USD pair to aim back to reclaim the 0.7400 mark.
Market participants now look forward to the US economic docket, featuring the release of JOLTS Job Openings data. This, along with a scheduled speech by Fed Governor Richard Clarida, will influence the USD. Traders might further take cues from the broader market risk sentiment for some short-term trading opportunities around the AUD/USD pair.
Technical levels to watch
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
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.