AUD/USD declines towards 0.6900 as Fed policymakers sound hawkish on rate guidance

AUD/USD is eyeing more weakness to near 0.6900 amid hawkish Fed policymakers’ guidance.
Fed Waller cited the battle to reach the 2% inflation target "might be a long fight".
The Australian Dollar will dance to the tunes of China’s inflation data.

Sagar Dua FXStreet

The AUD/USD pair has gauged an intermediate cushion around 0.6920 in the early Asian session. The Aussie asset is expected to continue the downside momentum as signs of a pullback are missing yet. Also, the risk profile is negative as investors are expecting that more interest rate hikes by the Federal Reserve (Fed) will deepen recession fears in the United States.

S&P500 witnessed a sell-off by the market participants as further rate hikes by the Fed will soften the economic activities further, portraying a risk aversion theme. Apart from that, the proposal from US President Joe Biden to tax billionaires heavily by quadrupling taxes on corporate buybacks to which investors show dissatisfaction.

The US Dollar Index (DXY) is aiming to shift its auction profile above 103.00 as upbeat labor market data has triggered the risk of further policy tightening by the Federal Reserve (Fed). Contrary to that, the return provided on 10-year US Treasury bonds dropped below 3.62%.

Fed Governor Christopher Waller said on Wednesday that inflation seems poised to continue slowing this year but the US central bank's battle to reach its 2% target "might be a long fight" with monetary policy kept tighter for longer than anticipated, as Reuters reported. The strong labor market data will also be followed by higher employment costs to address the former, which could trigger upward pressure on the inflation projections.

On the Aussie front, investors are awaiting the release of China's Consumer Price Index (CPI) (Jan) data, which is scheduled for Friday. As per the consensus, the annual data is seen higher at 2.1% vs. the former release of 1.8%. Chinese administration is providing monetary stimulus to trigger economic recovery after dismantling pandemic controls, which is subjected to an increase in inflation, and eventually, infrastructure spending will also increase. It is worth noting that Australia is a leading trading partner of China and a significant economic recovery in China will support the Australian Dollar.

AUD/USD

Overview
Today last price	0.6923
Today Daily Change	-0.0028
Today Daily Change %	-0.40
Today daily open	0.6951

Trends
Daily SMA20	0.7005
Daily SMA50	0.6862
Daily SMA100	0.6674
Daily SMA200	0.6809

Levels
Previous Daily High	0.6989
Previous Daily Low	0.6879
Previous Weekly High	0.7158
Previous Weekly Low	0.6919
Previous Monthly High	0.7143
Previous Monthly Low	0.6688
Daily Fibonacci 38.2%	0.6947
Daily Fibonacci 61.8%	0.6921
Daily Pivot Point S1	0.6891
Daily Pivot Point S2	0.683
Daily Pivot Point S3	0.6781
Daily Pivot Point R1	0.7
Daily Pivot Point R2	0.7049
Daily Pivot Point R3	0.7109

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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