- 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.
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
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 holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.