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AUD/USD refreshes daily low, seems vulnerable near 0.6725-20 area amid bullish USD

  • AUD/USD meets with a fresh supply on Thursday amid the emergence of fresh USD buying.
  • Hawkish Fed expectations continue to push the US bond yields higher and underpin the buck.
  • Looming recession risks further contribute to driving flow away from the risk-sensitive Aussie.

The AUD/USD pair comes under some renewed selling pressure on Thursday and maintains its offered tone through the first half of the European session. The pair is currently placed around the 0.6725-0.6720 region and remains well within the striking distance of its lowest level since early January low touched the previous day.

The US Dollar regains positive traction and reverses a part of the previous day's sharp retracement slide from a multi-week top, which, in turn, is seen as a key factor weighing on the AUD/USD pair. Growing acceptance that the Fed will stick to its hawkish stance for longer continues to push the US Treasury bond yields higher. Apart from this, the prevalent cautious market mood - amid looming recession risks - further benefits the safe-haven Greenback and contributes to driving flows away from the risk-sensitive Aussie.

The markets seem convinced that the US central bank will continue to tighten its monetary policy in the wake of stubbornly high inflation. Moreover, the incoming US macro data pointed to an economy that remains resilient despite rising borrowing costs and should allow the Fed to keep interest rates higher. Adding to this, Minneapolis Fed President Neel Kashkari opened the door for a 50 bps hike at the next meeting in March and lifts the yield on the benchmark 10-year US government bond to its highest level since November.

Meanwhile, the overnight optimism led by the upbeat Chinese PMI prints for February fades rather quickly amid looming recession risk. This is evident from a generally softer tone around the equity markets, which lends additional support to the USD and suggests that the path of least resistance for the AUD/USD pair is to the downside. That said, it will still be prudent to wait for sustained weakness below the 0.6700 mark before placing fresh bearish bets and positioning for a further near-term depreciating move.

Market participants now look forward to the release of the Weekly Initial Jobless Claims data from the US, due later during the early North American session. This, along with the US bond yields and the broader risk sentiment, should influence the USD price dynamics and provide some impetus to the AUD/USD pair.

Technical levels to watch watch

AUD/USD

Overview
Today last price0.6736
Today Daily Change-0.0018
Today Daily Change %-0.27
Today daily open0.6754
 
Trends
Daily SMA200.6879
Daily SMA500.6896
Daily SMA1000.6739
Daily SMA2000.6796
 
Levels
Previous Daily High0.6784
Previous Daily Low0.6695
Previous Weekly High0.6921
Previous Weekly Low0.6719
Previous Monthly High0.7158
Previous Monthly Low0.6698
Daily Fibonacci 38.2%0.675
Daily Fibonacci 61.8%0.6729
Daily Pivot Point S10.6705
Daily Pivot Point S20.6656
Daily Pivot Point S30.6617
Daily Pivot Point R10.6794
Daily Pivot Point R20.6833
Daily Pivot Point R30.6882

Author

Haresh Menghani

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

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