AUD/USD retreats from 5-month highs as US Treasury yields rise

The AUD/USD retreats from five-month highs of 0.6735 and drops below the 0.6700 figure courtesy of a jump in US Treasury bond yields, reflected on the Greenback (USD) paring some of its earlier losses. At the time of writing, the pair exchanges hands at 0.6694, down by a minimal 0.07%.

AUD/USD remains on the defensive due to a firm US Dollar

A risk-on impulse failed to underpin the AUD/USD pair on Monday. A sudden rise in US Treasury yields sponsored by US Federal Reserve officials pushing back against Chair Jerome Powell’s last Wednesday words cushioned the US Dollar from extending its losses.

The Fed parade began with the New York Fed President John William saying they have not discussed rate cuts. Instead, the discussion lies in whether the Fed is sufficiently restrictive or has room for higher rates. As most officials had said, that would depend on upcoming data crossing the wires.

Meanwhile, Atlanta’s Fed President Raphael Bostic said they must remain resolute on fighting inflation despite projecting two rate cuts and a soft landing next year. Recently, the Chicago Fed President, Austan Goolsbee, stated he sees an improvement in inflation and added the Fed would not want to recommit to what they will do at future meetings.

Australia’s economy remains resilient after printing solid employment figures and steady Flash PMI reports. However, traders are awaiting the release of the Reserve Bank of Australia’s (RBA) last meeting minutes on Tuesday, alongside housing data on Wednesday. AUD/USD traders are also eyeing Chinese data as the People’s Bank of China (PBoC) is scheduled to announce its decision on interest rates.

AUD/USD Price Analysis: Technical outlook

The AUD/USD daily chart portrays the pair as upward biased, and despite retracting below the 0.67 figure, the uptrend is intact. It should be said that once buyers reclaimed an 11-month-old resistance trendline, it suggests that buyers are in charge, and they might lift the exchange rates upwards. If they reclaim 0.6700, the next resistance would be the July 27 high at 0.6821, followed by the July 14 high at 0.6894. On the other hand, a daily close below 0.6700 would pave the way to retest support at around 0.6650, followed by the 200-day moving average (DMA) at 0.6576.