AUD/USD sticks to gains near daily high, eyes 0.7000 mark amid weaker USD

AUD/USD regained positive traction and reversed a major part of Friday’s downfall.
Stability in the financial markets benefitted the aussie amid modest USD weakness.
Hawkish Fed expectations should act as a tailwind for the buck and cap the major.

Haresh Menghani FXStreet

The AUD/USD pair attracted some buying near the 0.6915 region on Monday and reversed a major part of its losses recorded on the last day of the previous week. The pair maintained its bid tone through the early part of the European session and was last seen trading near the daily high, just below the 0.7000 psychological mark.

The recent pullback in the US Treasury bond yields failed to assist the US dollar to capitalize on Friday's positive move, which, in turn, extended some support to the AUD/USD pair. Apart from this, signs of stability in the financial markets further undermined the greenback's safe-haven status and benefitted the risk-sensitive aussie. That said, a combination of factors might hold back bulls from placing aggressive bets and cap any meaningful upside for the major.

The markets seem convinced that the US central bank would stick to its policy tightening path to tame soaring inflation, which accelerated to the highest level since December 1981 in May. The bets were reaffirmed by the Fed's so-called dot plot, showing that the median projection for the federal funds rate stood at 3.4% for 2022 and 3.8% in 2023. Moreover, growing recession fears should continue to lend support to the USD and act as a headwind for the AUD/USD pair.

Investors remain concerned amid doubts that major central banks could hike interest rates without affecting global economic growth. This should keep a lid on any optimistic move in the markets and hold back traders from placing aggressive bullish bets around the AUD/USD pair. Traders now look forward to St. Louis Fed President James Bullard's public appearance for some impetus later during the US session amid absent relevant market-moving economic data from the US.

The focus would then shift to Reserve Bank of Australia RBA Governor Philip Lowe's speech during the Asian session on Tuesday. This, along with minutes from the latest RBA monetary policy meeting, will influence the Australian dollar and produce some meaningful trading opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price	0.6984
Today Daily Change	0.0064
Today Daily Change %	0.92
Today daily open	0.692

Trends
Daily SMA20	0.7107
Daily SMA50	0.7139
Daily SMA100	0.7221
Daily SMA200	0.7242

Levels
Previous Daily High	0.7054
Previous Daily Low	0.6896
Previous Weekly High	0.707
Previous Weekly Low	0.685
Previous Monthly High	0.7267
Previous Monthly Low	0.6828
Daily Fibonacci 38.2%	0.6957
Daily Fibonacci 61.8%	0.6994
Daily Pivot Point S1	0.6859
Daily Pivot Point S2	0.6799
Daily Pivot Point S3	0.6702
Daily Pivot Point R1	0.7017
Daily Pivot Point R2	0.7114
Daily Pivot Point R3	0.7174

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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