AUD/USD nears cycle low after Powell’s hawkish remarks

AUD/USD fell more than 0.50%, to a daily low near 0.6380.
Jerome Powell opened the door to another hike in this tightening cycle.
Rising US yields make the USD gain interest.

Patricio Martín FXStreet

At the end of the week, the USD gained ground against its rivals, mainly driven by the Federal Reserve’s (Fed) chairman, Jerome Powell, at the Jackson Hole Symposium. On the Aussie side, no relevant data or events are on the docket in Friday’s session.

Jerome Powell’s speech at the Jackson Hole Symposium sounded hawkish. He stated that the economy didn’t cool down as expected and that the Fed will proceed “carefully” for the next decisions. He then pointed out that “there is no way to know what the neutral rate would be,” and markets are betting higher odds of another hike in 2023.

According to the CME FedWatch tool, the odds of a 25 basis points (bps) hike in November rose to nearly 44% vs. 33% a week ago. The odds of a pause remain high in September while investors are betting on cuts in June-July 2024.

As a reaction, the US Treasury yield rose, with the 2,5 and 10-year rates rising to 5.07%, 4.46% and 4.25%, respectively, giving the USD a boost.

AUD/USD Levels to watch

Based on the daily chart, it is evident that AUD/USD leans toward a bearish outlook in the short term. The Relative Strength Index (RSI) remains below its midline in negative territory, showcasing a southward slope. Similarly, the Moving Average Convergence Divergence (MACD) exhibits red bars, emphasising the strengthening bearish momentum for AUD/USD. Also, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), implying that the bears retain control on a broader scale.

Support levels: 0.6380, 0.6370 (cycle low), 0.6350.

Resistance levels: 0.6435, 0.6480, 0.6500 (20-day SMA).

AUD/USD Daily chart

AUD/USD

Overview
Today last price	0.6399
Today Daily Change	-0.0018
Today Daily Change %	-0.28
Today daily open	0.6417

Trends
Daily SMA20	0.6511
Daily SMA50	0.6646
Daily SMA100	0.6657
Daily SMA200	0.6729

Levels
Previous Daily High	0.6488
Previous Daily Low	0.6413
Previous Weekly High	0.6522
Previous Weekly Low	0.6364
Previous Monthly High	0.6895
Previous Monthly Low	0.6599
Daily Fibonacci 38.2%	0.6442
Daily Fibonacci 61.8%	0.6459
Daily Pivot Point S1	0.6391
Daily Pivot Point S2	0.6364
Daily Pivot Point S3	0.6315
Daily Pivot Point R1	0.6466
Daily Pivot Point R2	0.6515
Daily Pivot Point R3	0.6542

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.