AUD/USD once again fails ahead of 0.77 handle, headed back to session lows

Haresh Menghani FXStreet

• Struggles to move past 200-DMA strong barrier.
• RBA dials back its inflation forecast, signals rates on hold.
• Pickup in the US bond yields adds to downward pressure.

The AUD/USD pair continued with its struggle to move past the very important 200-day SMA hurdle and has now drifted into negative territory.

In its latest assessment of the economy, the Reserve Bank of Australia (RBA) slashed its inflation forecasts over the next two years on concerns over slow wages growth. The dovish outlook implied that the central bank was in no rush to lift interest rates anytime soon and dragged the pair to a session low level of 0.7664.

The pair quickly rebounded from lows and retested the 0.7695-0.7700 region, 200-day SMA supply zone. However, a strong uptick in the US Treasury bond yields helped offset US tax bill concerns and extended some support to the US Dollar demand, which eventually capped any additional gains for higher-yielding currencies - like the Aussie.

The pair has now retreated back to the lower end of the daily trading range as traders now look forward to the only scheduled release of Prelim UoM Consumer Sentiment Index from the US for some short-term trading impetus.

In the meantime, the US bond yield dynamics would continue to act as an exclusive driver of the pair's momentum on the last trading day of the week.

Technical levels to watch

Immediate support is pegged near mid-0.7600s and is closely followed by multi-month lows support near the 0.7625 region. A follow-through weakness could drag the pair below the 0.7600 handle towards its next support near the 0.7580-75 region.

On the upside, the 0.7695-0.7700 region (200-day SMA) remains immediate strong, which if conquered is likely to trigger a short-covering bounce towards 0.7755-60 horizontal resistance.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs just above the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.