AUD/USD recovers further from multi-month low ahead of US ISM PMI, RBA in focus

AUD/USD is reversing an intraday slide to over a three-month low touched earlier on Monday.
The risk-on impulse is acting as a headwind for the safe-haven USD and extending some support.
The upside seems limited ahead of the RBA decision on Tuesday and FOMC on Wednesday.

Haresh Menghani FXStreet

The AUD/USD pair managed to recover nearly 50 pips from over a three-month low and climbed to a fresh daily peak, around the 0.7080 region during the first half of the European session.

Disappointing Chinese PMI prints released over the weekend fueled fears about a sharp slowdown in the world's second-largest economy and weighed on the China-proxy Australian dollar. This, along with some intraday US dollar buying, this dragged the AUD/USD pair to its lowest level since March, though the intraday downtick stalled near the 0.7030 region.

A generally positive tone around the equity markets benefitted the perceived riskier aussie acted as a headwind for the safe-haven USD. Apart from this, speculations that the Reserve Bank of Australia could lift the official target cash rate on Tuesday in the wake of last week's sharp rise in inflation extended support to the AUD/USD pair.

That said, any meaningful upside still seems elusive as investors might refrain from placing aggressive bets ahead of this week's key central banks event/data risks. The RBA is scheduled to announce its monetary policy decision during the Asian session on Tuesday. The market focus, however, will remain glued to the outcome of a two-day FOMC meeting.

The US central bank is universally expected to adopt a more aggressive policy response to curb soaring inflation and hike interest rates by 50 bps. Apart from this, investors will look for clues on the Fed's plan for balance sheet reduction and guidance on future interest rate hikes. This would act as a catalyst and have a significant effect on global markets.

In the meantime, traders on Monday will take cues from the US economic docket, featuring the release of the US ISM Manufacturing PMI due later during the early North American session. This, along with US bond yields and the broader market risk sentiment, will influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price	0.7072
Today Daily Change	0.0011
Today Daily Change %	0.16
Today daily open	0.7061

Trends
Daily SMA20	0.7355
Daily SMA50	0.7351
Daily SMA100	0.7262
Daily SMA200	0.7288

Levels
Previous Daily High	0.718
Previous Daily Low	0.7058
Previous Weekly High	0.7257
Previous Weekly Low	0.7054
Previous Monthly High	0.7662
Previous Monthly Low	0.7054
Daily Fibonacci 38.2%	0.7105
Daily Fibonacci 61.8%	0.7133
Daily Pivot Point S1	0.702
Daily Pivot Point S2	0.6978
Daily Pivot Point S3	0.6898
Daily Pivot Point R1	0.7142
Daily Pivot Point R2	0.7222
Daily Pivot Point R3	0.7264

Author

Haresh Menghani

FXStreet

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

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