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AUD/USD eases from five-month high, holds steady below 0.7000 amid sustained USD selling

  • AUD/USD gains some follow-through traction on Monday and climbs to a fresh five-month high.
  • Bets for smaller Fed rate hikes, a positive risk tone undermines the USD and offers some support.
  • Looming recession fears cap the optimism and act as a headwind for the risk-sensitive Aussie.

The AUD/USD pair kicks off the new week on a positive note and climbs to its highest level since mid-August during the Asian session. The pair, however, trim a part of its intraday gains and retreat below the 0.7000 psychological mark in the last hour.

A combination of factors drags the US Dollar to a fresh seven-month low on Monday, which, in turn, acts as a tailwind for the AUD/USD pair. The US consumer inflation figures released last week showed that the headline CPI fell for the first time in more than 2-1/2 years in December. The data fueled speculations that the Fed may be nearing the end of its rate-hiking cycle and lifted bets for smaller rate hikes in February. This, along with a generally positive tone around the equity markets, continues to weigh on the safe-haven buck and benefits the risk-sensitive Aussie.

The Australian Dollar draws additional support from rising odds for a further interest rate hike by the Reserve Bank of Australia (RBA) in February, bolstered by the upbeat domestic data released last week. In fact, the Australian Bureau of Statistics reported that the headline Consumer Price Index (CPI) re-accelerated to the 7.3% YoY rate - a 32-year-high - in November from the 6.9% in the previous month. Furthermore, Australian Retail Sales surpassed the most optimistic estimates and jumped 1.4% in November, while October's reading was also revised up to show a 0.4% growth.

Market participants, however, remain worried about the economic headwinds stemming from the COVID-19 outbreak in China. Apart from this, the protracted Russia-Ukraine war has been fueling concerns about a deeper global economic downturn, which keeps a lid on the optimism in the markets. Traders also seem reluctant to place aggressive bullish bets around the AUD/USD pair amid a holiday in the US and ahead of the Chinese economic release, including the Q3 GDP print, on Tuesday.

Technical levels to watch

AUD/USD

Overview
Today last price0.6987
Today Daily Change0.0009
Today Daily Change %0.13
Today daily open0.6978
 
Trends
Daily SMA200.6795
Daily SMA500.6739
Daily SMA1000.6635
Daily SMA2000.6831
 
Levels
Previous Daily High0.6994
Previous Daily Low0.6915
Previous Weekly High0.6994
Previous Weekly Low0.686
Previous Monthly High0.6893
Previous Monthly Low0.6629
Daily Fibonacci 38.2%0.6964
Daily Fibonacci 61.8%0.6945
Daily Pivot Point S10.6931
Daily Pivot Point S20.6884
Daily Pivot Point S30.6852
Daily Pivot Point R10.7009
Daily Pivot Point R20.7041
Daily Pivot Point R30.7088

Author

Haresh Menghani

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

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