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AUD/USD hovers around 0.6900, over two-week low as focus shifts to RBA on Tuesday

  • AUD/USD turns lower for the third straight day and is pressured by a combination of factors.
  • Strong follow-through USD buying and the risk-off mood weigh on the risk-sensitive Aussie.
  • The downside seems limited in the absence of US macro data and ahead of the RBA on Tuesday.

The AUD/USD pair struggles to preserve its modest intraday gains on Monday and attracts fresh sellers in the vicinity of mid-0.6900s. The pair turns back lower for the third successive day and retreats to the 0.6900 mark during the mid-European session, closer to over a two-week low touched earlier today.

The post-NFP strong US Dollar recovery from a nine-month low remains uninterrupted on the first day of a new week, which, in turn, is seen exerting some downward pressure on the AUD/USD pair. The upbeat US monthly employment details pointed to the underlying strength in the labor market and should allow the Fed to keep hiking interest rates. This, in turn, continues to push the US Treasury bond yields higher and underpins the Greenback.

Apart from this, the prevalent risk-off environment is seen driving haven flows towards the buck and further weighs on the risk sentiment. Expectations that the US central bank will stick to its hawkish stance for longer, along with fears of worsening US-China relations, take their toll on the global risk sentiment. This is evident from a sea of red across the equity markets that this is forcing investors to take refuge in safe-haven assets.

The downside for the AUD/USD pair remains limited, at least for the time being, as traders await the latest monetary policy update by the Reserve Bank of Australia (RBA). The central bank is scheduled to announce its decision during the Asian session on Tuesday and is expected to hike interest rates by 25 bps for the fourth time in a row. The bets were reaffirmed by the stronger domestic CPI, which rose to the highest level since 1990 in Q4.

Hence, it will be prudent to wait for strong follow-through selling before traders start positioning for an extension of the recent pullback from the highest level since June 2022, touched last week. In the absence of any relevant market-moving economic releases from the US, the Greenback remains at the mercy of the US bond yields. This, along with the broader risk sentiment, might produce short-term opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price0.6908
Today Daily Change-0.0015
Today Daily Change %-0.22
Today daily open0.6923
 
Trends
Daily SMA200.7003
Daily SMA500.6851
Daily SMA1000.667
Daily SMA2000.6811
 
Levels
Previous Daily High0.7088
Previous Daily Low0.6919
Previous Weekly High0.7158
Previous Weekly Low0.6919
Previous Monthly High0.7143
Previous Monthly Low0.6688
Daily Fibonacci 38.2%0.6983
Daily Fibonacci 61.8%0.7023
Daily Pivot Point S10.6865
Daily Pivot Point S20.6808
Daily Pivot Point S30.6697
Daily Pivot Point R10.7034
Daily Pivot Point R20.7145
Daily Pivot Point R30.7202

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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