AUD/USD consolidates the bounce above 0.7450 ahead of Powell
- AUD/USD consolidates the recovery above 0.7450 amid USD pullback.
- The aussie remains weighed down by the Australian covid concerns.
- Focus remains on Fed Chair Powell’s testimony for fresh direction.
Having found strong bids near 0.7435, AUD/USD took a flight, now consolidating the bounce above 0.7450 amid a cautious market mood.
On Tuesday, hotter-than-expected US inflation data spooked markets, downing the global stocks while boding well for the greenback. The spot fell as low as 0.7427 on the US CPI release.
The risk sentiment continues to remain sour heading into the Fed Chair Jerome Powell’s testimony this Wednesday, as markets expect Powell to hint at a likely monetary policy normalization, given the inflation surge.
The recovery in the risk-sensitive aussie, therefore, appears at risk, although the recent retracement in the greenback has offered some respite to the AUD bulls. The ongoing uptick in the currency pair can be also associated with the advance in gold price, which underpins the resource-linked aussie.
In the day ahead, the dollar’s price action amid Treasury yields dynamics will continue to influence the aussie. Meanwhile, investors remain concerned about the rapid spread of the Delta covid variant in Australia, with seven news cases reported in Melbourne while Sydney battles the highly contagious outbreaks.
AUD/USD technical levels
The AUD/USD pair is poised to extend its decline in the near term. The 4-hour chart shows that it is currently developing below all of its moving averages, as technical indicators head south within negative levels. The pair posted a yearly low at 0.7409 last week, with a break below the level favoring a continued decline towards the 0.7250/60 price zone. Support levels: 0.7410 0.7370 0.7320. Resistance levels: 0.7490 0.7530 0.7570, explains Valeria Bednarik, FXStreet’s Chief Analyst.
AUD/USD additional levels to watch
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
