|

AUD/USD remains capped below 0.700 mark, downside seems cushioned amid weaker USD

  • AUD/USD attracts some buyers for the second successive day, though lacks bullish conviction.
  • Expectations for a less hawkish Fed, sliding US bond yields weigh on the USD and lend support.
  • Looming recession risks and the cautious mood act as a headwind for the risk-sensitive Aussie.

The AUD/USD pair adds to the previous day's strong gains and edges higher for the second successive day on Wednesday. Spot prices, however, seem to struggle to capitalize on the move and remain below the 0.7000 psychological mark through the mid-European session.

The Australian Dollar continues to draw some support from the RBA's hawkish outlook, signalling that further rate increases will be needed to ensure that inflation returns to target. Apart from this, the emergence of fresh selling around the US Dollar turns out to be another factor acting as a tailwind for the AUD/USD pair.

Against the backdrop of the upbeat US NFP report, Fed Chair Jerome Powell on Tuesday acknowledged that interest rates might need to move higher than expected if the economy remained strong. Powell, however, reiterated that the process of disinflation was underway and fueled speculations that interest rates may not rise much further.

Reviving bets for an imminent pause in the Fed's policy-tightening cycle triggers a fresh leg down in the US Treasury bond yields, which, in turn, weighs on the USD and lends support to the AUD/USD pair. That said, a generally weaker tone around the equity markets holds back bulls from placing fresh bets around the risk-sensitive Aussie.

The market sentiment remains fragile amid worries about economic headwinds stemming from the continuous rise in borrowing costs, the COVID-19 outbreak in China and the protracted Russia-Ukraine war. Apart from this, fears about worsening US-China relations further temper investors' appetite for riskier assets and cap the AUD/USD pair.

The aforementioned mixed fundamental backdrop makes it prudent to wait for some follow-through buying before confirming that the recent pullback from the highest level since June 2022 has run its course. In the absence of any relevant market-moving US macro data, traders on Wednesday will take cues from speeches by influential FOMC members.

Technical levels to watch

AUD/USD

Overview
Today last price0.6975
Today Daily Change0.0024
Today Daily Change %0.35
Today daily open0.6951
 
Trends
Daily SMA200.7005
Daily SMA500.6862
Daily SMA1000.6674
Daily SMA2000.6809
 
Levels
Previous Daily High0.6989
Previous Daily Low0.6879
Previous Weekly High0.7158
Previous Weekly Low0.6919
Previous Monthly High0.7143
Previous Monthly Low0.6688
Daily Fibonacci 38.2%0.6947
Daily Fibonacci 61.8%0.6921
Daily Pivot Point S10.6891
Daily Pivot Point S20.683
Daily Pivot Point S30.6781
Daily Pivot Point R10.7
Daily Pivot Point R20.7049
Daily Pivot Point R30.7109

Author

Haresh Menghani

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

More from Haresh Menghani
Share:

Editor's Picks

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.
 

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Ethereum Price Forecast: BitMine extends ETH buying streak, says long-term outlook remains positive

Ethereum (ETH) treasury firm BitMine Immersion continued its weekly purchase of the top altcoin last week after acquiring 45,759 ETH.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months. 

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.