- AUD/USD failed to preserve its modest intraday gains, or find acceptance above the 0.7200 mark.
- The divergent Fed-RBA monetary policy outlooks support prospects for additional near-term losses.
The AUD/USD pair witnessed some selling during the first half of the European session and dropped to a near three-month low, around the 0.7180 region in the last hour.
Having struggled to find acceptance above the 0.7200 mark, the AUD/USD pair met with fresh supply on Thursday and now seems all set to prolong a near one-month-old bearish trend. The intraday US dollar profit-taking slide remained cushioned amid hawkish Fed expectations, which, in turn, acted as a headwind for the major.
The markets seem convinced that the Fed would be forced to raise interest rates sooner rather than later to contain stubbornly high inflationary pressures. The bets were reinforced by Wednesday's release of the US PCE Price Index – which accelerated to a 30 year high in October – and the FOMC monetary policy meeting minutes.
In fact, the Fed officials were open to speeding up the tapering of the bond-buying program and move quickly to raise interest rates if high inflation persists. Conversely, the Reserve Bank of Australia has made every effort to push back expectations for a rate hike. The Fed-RBA divergent policy outlooks favour the AUD/USD bears.
That said, relatively thin liquidity conditions on the back of the Thanksgiving holiday in the US might hold back traders from positioning for any further intraday slide. Nevertheless, the AUD/USD pair seems vulnerable to breakthrough intermediate support near the 0.7170 region and challenge YTD low, around the 0.7100 mark touched in August.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0800 after upbeat US data
EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.