- AUD/USD regained positive traction on Thursday and reversed a major part of the overnight fall.
- Retreating US bond yields prompted fresh selling around the USD and extended support to the pair.
- The risk-off mood kept a lid on any further gains for the perceived riskier aussie, at least for now.
The AUD/USD pair retreated a few pips from the daily high and was seen trading around the 0.7000 psychological mark during the first half of the European session, up nearly 0.60% for the day.
A combination of supporting factors assisted the AUD/USD pair to attract fresh buying near the 0.6950 area on Thursday and reverse a major part of the overnight retracement slide from a one-week high. The Australian dollar drew some support from domestic employment data, which showed that the jobless rate fell to the lowest level in almost 50 years. On the other hand, modest pullback in the US Treasury bond yields kept the US dollar bulls on the defensive and extended additional support to the major.
The AUD/USD pair, however, struggled to capitalize on the move and witnessed some selling near the 0.7025 region amid the prevalent risk-off environment. Investors seem worried that a more aggressive move by major central banks to constrain inflation could hit global economic growth. Adding to this, extended COVID-19 lockdowns in China and the Russia-Ukraine war have been fueling recession fears, which, in turn, took its toll on the global risk sentiment and capped the perceived riskier aussie.
Meanwhile, expectations that the Fed would need to take more drastic action to bring inflation under control act as a tailwind for the US bond yields and the buck. The bets were reaffirmed by Fed Chair Jerome Powell's hawkish comments on Tuesday, saying that he will back interest rate increases until prices start falling back toward a healthy level. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the AUD/USD pair's recovery from the YTD low.
Market participants now look forward to the US economic docket, featuring the release of the Philly Fed Manufacturing Index, the usual Weekly Initial Jobless Claims and Existing Home Sales data. Apart from this, the US bond yields, will influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities.
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
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold keeps consolidating ahead of US first-tier figures
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Bitcoin price could be primed for correction as bearish activity grows near $66K area
Bitcoin (BTC) price managed to maintain a northbound trajectory after the April 20 halving, despite bold assertions by analysts that the event would be a “sell the news” situation. However, after four days of strength, the tables could be turning as a dark cloud now hovers above BTC price.
Bank of Japan's predicament: The BOJ is trapped
In this special edition of TradeGATEHub Live Trading, we're joined by guest speaker Tavi @TaviCosta, who shares his insights on the Bank of Japan's current predicament, stating, 'The BOJ is Trapped.'