AUD/USD extends recovery above 0.6470, DXY turns subdued ahead of Fed policy

AUD/USD aims to sustain its recovery amid a decline in hawkish Fed bets.
The DXY struggles to sustain above 110.40 as the risk impulse remains mute.
The RBA could remain in dilemma whether to return to the 50 bps rate hike pattern or go for frequent small hikes.

Sagar Dua FXStreet

The AUD/USD pair has extended its recovery above the intraday hurdle of 0.6470 amid mixed cues from market sentiment. S&P500 futures are holding on to their morning losses amid the absence of a positive trigger, while 10-year US Treasury yields have resurfaced after dropping to near 3.93%.

The US dollar index (DXY) is struggling around 110.40 in the early European session after a sheer reversal on Thursday. Robust Gross Domestic Product (GDP) numbers from July to September brought a relief rally for the DXY.

The US GDP for the third quarter landed at 2.6% and remained upbeat from the projections of 2.4%. Also, a shift into expansion mode after displaying economic contraction in the first half of CY2022 led to a return of investors’ confidence in the economic prospects.

Going forward, investors will focus on the interest rate policy of the Federal Reserve (Fed), which is scheduled for next week. As per the CME FedWatch tool, the chances of 75 basis points (bps) rate hike by the Federal Reserve (Fed) stand at 82.85%.

The odds for a 75 bps rate hike have been trimmed after a slowdown in consumer spending in the third quarter. This indicates that exhaustion in the inflationary pressures is not so far and the market participants will witness a decline in price pressures in the coming months.

On the Aussie front, a historic surge in the inflation rate, released this week, at 7.3%, could weigh on the Reserve Bank of Australia (RBA)’s decision-making regarding the extent of the hike in the Official Cash Rate (OCR). RBA Governor Philip Lowe could remain in dilemma whether to return to the 50 bps rate hike pattern or go for frequent small hikes.

AUD/USD

Overview
Today last price	0.6471
Today Daily Change	0.0018
Today Daily Change %	0.28
Today daily open	0.6453

Trends
Daily SMA20	0.6361
Daily SMA50	0.6594
Daily SMA100	0.6759
Daily SMA200	0.6994

Levels
Previous Daily High	0.6522
Previous Daily Low	0.6426
Previous Weekly High	0.6393
Previous Weekly Low	0.6197
Previous Monthly High	0.6916
Previous Monthly Low	0.6363
Daily Fibonacci 38.2%	0.6463
Daily Fibonacci 61.8%	0.6485
Daily Pivot Point S1	0.6412
Daily Pivot Point S2	0.6371
Daily Pivot Point S3	0.6315
Daily Pivot Point R1	0.6508
Daily Pivot Point R2	0.6563
Daily Pivot Point R3	0.6604

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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