- A combination of supporting factors pushed AUD/USD to a two-week high on Monday.
- RBA’s hawkish signal acted as a tailwind for the aussie amid broad-based USD weakness.
- The risk-on impulse dragged the USD to a fresh monthly low and remained supportive.
The AUD/USD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a range around the 0.7100-0.7110 area, or a two-week high.
Following Friday's modest downtick, the AUD/USD pair attracted fresh buying on the first day of a new week and was supported by a combination of factors. The Australian dollar continued drawing support from the Reserve Bank of Australia's hawkish signal that a bigger interest rate hike is still possible in June amid the upside risks to inflation. On the other hand, the risk-on impulse undermined the safe-haven US dollar and further benefitted the risk-sensitive aussie.
Investors turned optimistic amid hopes that loosening COVID-19 lockdowns in China could boost the global economy. This was evident from a generally positive tone around the equity markets, which drove flows away from traditional safe-haven assets and dragged the USD to a fresh monthly low. That said, hawkish Fed expectations could help limit any deeper USD losses.
The markets have fully priced in a 50 bps rate hike over the next two meetings, though expect that the US central bank would need to take more drastic action to bring inflation under control. This, along with an uptick in the US Treasury bond yields, supports prospects for the emergence of some USD buying, which, in turn, should cap the AUD/USD pair, at least for now.
In the absence of any major market-moving economic releases from the US, the broader risk sentiment and the US bond yields will influence the USD price dynamics. Traders will then look forward to the release of the flash PMI prints from Australia and the US on Tuesday for some meaningful impetus. The focus, however, will remain on Wednesday's release of the FOMC meeting minutes.
Technical levels to watch
|Today last price||0.7114|
|Today Daily Change||0.0075|
|Today Daily Change %||1.07|
|Today daily open||0.7039|
|Previous Daily High||0.7074|
|Previous Daily Low||0.7002|
|Previous Weekly High||0.7074|
|Previous Weekly Low||0.6872|
|Previous Monthly High||0.7662|
|Previous Monthly Low||0.7054|
|Daily Fibonacci 38.2%||0.703|
|Daily Fibonacci 61.8%||0.7047|
|Daily Pivot Point S1||0.7003|
|Daily Pivot Point S2||0.6967|
|Daily Pivot Point S3||0.6931|
|Daily Pivot Point R1||0.7074|
|Daily Pivot Point R2||0.711|
|Daily Pivot Point R3||0.7146|
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD battles 1.0700 amid calmer risk tone, German ZEW eyed
EUR/USD is juggling in a narrow range just above the 1.0700 level in early Europe. The pair is sidelined amid a relatively calmer risk tone and a pause in the US Dollar decline. Markets digest the latest global banking sector developments ahead of Germany's ZEW survey.
GBP/USD remains pressured around 1.2250 as US Dollar recovers
GBP/USD is on a corrective move lower while testing 1.2250 in the early European morning. A broad rebound in the US Dollar is weighing on the pair, despite a better market mood. Investors stay cautious amid the global banking woes and ahead of the Fed decision.
Gold lingers below the $2,000 mark as the market awaits Fed’s policy decision
Gold price reached a fresh yearly high on Monday this week, with XAU/USD hitting the $2,000 mark for only the third time in recorded history; the last time was during the COVID era. The robust bull run began from the March low of around $1,800, and gold prices have not looked back since.
Coinbase argues core staking services are not securities in its letter to SEC
Coinbase submitted a comment letter to the US financial regulator asking for clarification on core staking services. The exchange explained that staking services fail every single prong of the Howey test, therefore, cannot be treated as securities.
FX thoughts for the week
Do central banks face a conflict between their inflation mandate and financial stability? The markets are still grappling with this question and confidence in the financial sector has not fully recovered. For now, central banks are responding with a conditional no.