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.

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