AUD/USD steadies around 0.7250 following wild swings


  • AUD/USD fell sharply after jumping to fresh multi-month highs.
  • US Dollar Index looks to close above 93.00 with modest daily gains.
  • FOMC Chairman Powell introduced average inflation target as new strategy.

The AUD/USD pair fluctuated in a large range on Thursday and now looks to close the third straight day in the positive territory. As of writing, the pair was up 0.35% on the day at 0.7255.

Investors assess changes to the Fed's policy strategy

Wild swings witnessed in the US Dollar Index (DXY) caused AUD/USD to move sharply in both directions. The initial reaction to FOMC Chairman Powell's speech at the Jackson Hole Symposium dragged the DXY to a low of 92.42.

However, surging US Treasury bond yields during the American session provided a boost to the USD and allowed the DXY to jump above 93.30. With the market action turning subdued in the last hour, the DXY remains on track to end the day with modest gains above 93.00.

Powell announced that the Fed will adopt average target inflation as part of its new policy strategy and triggered a USD-selling wave. The chairman further clarified that any inflation overshoots will be moderate and helped US T-bond yields gain traction. Commenting on this announcement, Dallas Fed President Robert Kaplan explained that "moderate overshoot" of inflation means 2.25% or 2.5%. At the moment, the 10-year US T-bond yield is up 7.1% on the day at 0.736%. 

Meanwhile, the US Bureau of Economic Analysis' second estimate showed that the real Gross Domestic Product (GDP) in the US contracted by 31.7%, compared to the initial forecast of 32.9%.  

There won't be any significant macroeconomic data releases from Australia during the Asian session and the USD's market valuation is likely to remain the primary driver of AUD/USD's action.

Technical levels to watch for

AUD/USD

Overview
Today last price 0.7254
Today Daily Change 0.0021
Today Daily Change % 0.29
Today daily open 0.7233
 
Trends
Daily SMA20 0.7178
Daily SMA50 0.7059
Daily SMA100 0.682
Daily SMA200 0.6727
 
Levels
Previous Daily High 0.7241
Previous Daily Low 0.7186
Previous Weekly High 0.7277
Previous Weekly Low 0.7134
Previous Monthly High 0.7228
Previous Monthly Low 0.6876
Daily Fibonacci 38.2% 0.722
Daily Fibonacci 61.8% 0.7207
Daily Pivot Point S1 0.7199
Daily Pivot Point S2 0.7166
Daily Pivot Point S3 0.7145
Daily Pivot Point R1 0.7254
Daily Pivot Point R2 0.7275
Daily Pivot Point R3 0.7308

 

 

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