AUD/USD fifth day of downside towards 0.7550 at 2018 lows

AUD/USD bear move is driven by the US dollar demand which stems from rising US yields.
There is no macroeconomic data coming from Australia and New Zealand as stock markets and financial institutions are closed on April 25 for the Anzac Day.

Flavio Tosti Independent Analyst

The AUD/USD is trading at around 0.7560 down 0.57% while the aussie is under heavy pressure as the US dollar is taking center stage in Wednesday’s trading.

The AUD/USD bears are driving the pair down for the fifth day in a row with very limited pullbacks to the upside which do not exceed 20 or 40 pips. The bearish slide is driven by USD strength. The 10-year Treasury yields are on a bull run and trading above the 3.00% mark on Wednesday. Those levels have not been reached since January 2014. The recent US bond yields jump is attributed to rising inflation and rate hike expectations.

Further collaborating to the downside on the commodity-linked currency, AUD, is the downtick in gold which is trading in the $1,320 region and the pullback in US stocks which are correlated to the AUD.

Friday is the most important day for the pair as investors will closely pay attention to the Personal Consumption Expenditures Index (PCE) which is the favorite inflation indicator of the Federal Reserve Bank. A strong deviation to the upside can give an additional boost to the US dollar as investors will be confident that more rate hikes will be coming. On the same day, the US Gross Domestic Product (GDP) will also be the focus of attention for market participants. The GDP is expected to increase 0.4% quarterly and advancing 1.4% on an annual basis. A strong reading will reinforce the view that the US economy is expanding and that hiking interest rates is indeed justified.

AUD/USD daily chart

The trend is bearish. Support is seen at the 0.7550 psychological level and the 0.7500 handle. Resistance is seen at 0.7600 and 0.7700 handles.

Author

Flavio Tosti

Independent Analyst

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