- AUD/USD gains some follow-through traction on Wednesday amid the prevalent USD selling bias.
- Bets for less aggressive Fed rate hikes and stability in the equity markets weigh on the greenback.
- Investors now look to the US macro data for some impetus ahead of the FOMC meeting minutes.
The AUD/USD pair attracts some buying near the 0.6630 area on Wednesday and climbs to a two-day high during the early European session, albeit lacks follow-through. The pair is currently placed just above the 0.6650 level and remains well supported by modest US Dollar weakness.
In fact, the USD Index, which measures the greenback's performance against a basket of currencies, is seen extending its pullback from over a one-week high and losing ground for the second straight day. Growing acceptance that the Federal Reserve will slow the pace of its policy-tightening cycle turns out to be a key factor that continues to weigh on the greenback. Apart from this, stability in the equity markets further undermines the safe-haven buck and benefits the risk-sensitive Aussie.
That said, concerns about the potential economic headwinds stemming from a spike in new COVID-19 cases in China and the imposition of fresh lockdowns keep a lid on the optimism. Furthermore, the recent hawkish remarks by several Fed officials suggest that the US central bank might continue to raise borrowing costs to tame inflation. This, in turn, should limit any deeper losses for the buck and cap the upside for the AUD/USD pair. Traders might also refrain from placing aggressive bets and prefer to wait for a fresh catalyst from the release of the November FOMC meeting minutes.
Hence, it will be prudent to wait for strong follow-through buying before confirming that the pullback from over a two-month high touched last week has run its course and positioning for any further gains. Heading into the key event risk, traders on Wednesday might take cues from the US macro data - Durable Goods Orders and the usual Weekly Initial Jobless Claims. This, along with the broader risk sentiment, will influence the USD demand and provide some impetus to the AUD/USD pair.
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 holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.