AUD/USD climbs to three-day high around 0.7100 mark, lacks follow-through

AUD/USD attracted some dip-buying near the post-RBA swing low, around the 0.7030 area.
The ongoing USD retracement slide from the 18-month low extended support to the major.
The Fed’s hawkish stance, a softer risk tone helped limit the USD losses and capped the pair.

Haresh Menghani FXStreet

USD selling picked up pace during the early part of the European session and pushed the AUD/USD pair to the 0.7100 neighbourhood, or a three-day high in the last hour.

The pair moved into the positive territory for the second successive day on Tuesday – quickly reversing its intraday slide to the 0.7030 area.

The US dollar added to the overnight heavy losses and moved further away from the 18-month high amid a fresh leg down in the US Treasury bond yields. This, in turn, assisted the AUD/USD pair to attract some dip-buying on Tuesday, though the uptick lacked bullish conviction. Expectations that the Fed will tighten its monetary policy at a faster pace than anticipated should help limit any meaningful slide for the greenback.

It is worth recalling that the markets seem convinced about an eventual Fed liftoff in March and have been pricing in the possibility of five quarter-point rate hikes by the end of 2022. Apart from this, a generally weaker tone around the equity markets extended some support to the safe-haven buck and kept a lid on any meaningful upside for the perceived riskier aussie. This warrants some caution for bullish traders and positioning for any further gains.

Nevertheless, the AUD/USD pair, so far, has struggled to make it through the 0.7090-0.7100 strong support breakpoint, now turned resistance. The Reserve Bank of Australia (RBA) pushed back against market bets and indicated that it would be patient in terms of raising interest rates despite soaring inflation. This comes on the back of a larger than expected fall in Australian Retail Sales and exerted some downward pressure on the AUD/USD pair.

Market participants now look forward to the US economic docket, highlighting the release of ISM Manufacturing PMI. This, along with the US bond yields, will influence the USD and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities.

Technical levels to watch

AUD/USD

Overview
Today last price	0.7081
Today Daily Change	0.0011
Today Daily Change %	0.16
Today daily open	0.707

Trends
Daily SMA20	0.7174
Daily SMA50	0.7169
Daily SMA100	0.726
Daily SMA200	0.7393

Levels
Previous Daily High	0.7078
Previous Daily Low	0.6985
Previous Weekly High	0.7188
Previous Weekly Low	0.6966
Previous Monthly High	0.7315
Previous Monthly Low	0.6966
Daily Fibonacci 38.2%	0.7042
Daily Fibonacci 61.8%	0.702
Daily Pivot Point S1	0.701
Daily Pivot Point S2	0.6951
Daily Pivot Point S3	0.6917
Daily Pivot Point R1	0.7104
Daily Pivot Point R2	0.7137
Daily Pivot Point R3	0.7197

Author

Haresh Menghani

FXStreet

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

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