AUD/USD recovers early lost ground, climbs to fresh weekly high around 0.7155 region

AUD/USD attracted some dip-buying on Wednesday and bounced over 35 pips from the daily low.
Easing Omicron fears extended support to the perceived riskier aussie and provided a modest lift.
The Fed’s hawkish outlook acted as a tailwind for the USD and capped any further gains for the pair.

Haresh Menghani FXStreet

The AUD/USD pair climbed back above mid-0.7100s during the first half of the European session and refreshed the weekly high in the last hour.

The pair attracted some dip-buying near the 0.7120 region on Wednesday and is now looking to build on this week's bounce from the 0.7080 area or the lowest level since December 7. Reports that the current vaccines may be more effective than first thought in fighting the Omicron variant boosted investors' confidence. This, in turn, was seen as a key factor that extended some support to the perceived riskier aussie.

Apart from this, a fresh leg down in the US Treasury bond yields undermined the safe-haven US dollar and contributed to the AUD/USD pair's goodish intraday bounce of around 35 pips. That said, the Fed's hawkish outlook acted as a tailwind for the greenback and capped gains for the major. It is worth recalling that the so-called dot plot indicated that Fed officials expect to raise the fed funds rate at least three times next year.

Investors also seemed reluctant to place aggressive bets amid relatively thin liquidity conditions heading into the end-of-year holiday season. This, in turn, warrants some caution for bullish traders and before positioning for any further gains. Market participants now look forward to the US economic docket, highlighting the release of the final Q3 GDP print and the Conference Board's Consumer Confidence Index for a fresh impetus.

Apart from this, the US bond yields will influence the USD price dynamics. Traders will further take cues from developments surrounding the coronavirus saga and the broader market risk sentiment to grab some short-term opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price	0.7154
Today Daily Change	-0.0002
Today Daily Change %	-0.03
Today daily open	0.7156

Trends
Daily SMA20	0.713
Daily SMA50	0.7291
Daily SMA100	0.7298
Daily SMA200	0.7463

Levels
Previous Daily High	0.7157
Previous Daily Low	0.7099
Previous Weekly High	0.7225
Previous Weekly Low	0.709
Previous Monthly High	0.7537
Previous Monthly Low	0.7063
Daily Fibonacci 38.2%	0.7135
Daily Fibonacci 61.8%	0.7121
Daily Pivot Point S1	0.7117
Daily Pivot Point S2	0.7079
Daily Pivot Point S3	0.7059
Daily Pivot Point R1	0.7175
Daily Pivot Point R2	0.7195
Daily Pivot Point R3	0.7234

Author

Haresh Menghani

FXStreet

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

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY remains confined in a range; 158.00 holds the key

USD/JPY extends its consolidative move during the Asian session on Tuesday, trading below 158.00 amid diverging forces. Hawkish BoJ expectations support the Japanese Yen amid looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, holds back traders from placing aggressive directional bets.

Gold holds steady below $4,150 as receding Fed hike bets lend support

Gold continues its struggle to gain any meaningful traction, holding steady below $4,150 during the Asian session on Tuesday. Receding October Fed hike bets act as a tailwind for the non-yielding bullion, though a bullish US Dollar caps the upside. Furthermore, traders await the release of the FOMC Minutes on Wednesday for more cues about the future policy path and some meaningful impetus.

Ethereum: BitMine scoops extra ETH tokens following Q3 outperformance

Ethereum (ETH) treasury firm BitMine Immersion continued its buying streak of the top altcoin last week. The firm acquired 15,112 ETH, lifting its holdings to 6.016 million ETH, representing 4.9% of ETH's circulating supply and worth $16.16 billion at the time of writing. That brings the company roughly 98.5% closer to acquiring 5% of ETH's supply, a goal it tags "Alchemy of 5%."

Markets just priced out rate hikes on financial stress. This chart shows why 2022-23 says they’ll be wrong

Traders have taken about one quarter-point hike out of their European Central Bank forecasts since mid-September, betting the ECB will stop raising rates because of a French debt selloff. The same bet failed twice in 2022 and 2023, when the ECB kept raising rates through financial stress because inflation was above its 2% target. Euro-area inflation came in at 3.8% in September.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.