- Renewed USD buying interest prompted some fresh selling around AUD/USD on Tuesday.
- The Fed’s hawkish shifts, the overnight rally in the US bond yields underpinned the USD.
- A softer risk tone further weighed on the perceived riskier aussie ahead of Powell’s testimony.
The AUD/USD pair refreshed daily lows in the last hour, with bears making a fresh attempt to extend the downward trajectory below the key 0.7500 psychological mark.
The pair failed to capitalize on the previous day's modest recovery move from six-month lows, instead met with some fresh supply in the vicinity of the very important 200-day SMA. Following a modest pullback on Monday, the US dollar was back in demand and remained well supported by the Fed's sudden hawkish turn last week. This, in turn, was seen as a key factor that exerted some fresh downward pressure on the GBP/USD pair.
It is worth recalling that the Fed surprised investors at the end of June policy meeting and brought forward its timetable for the first post-pandemic interest rate hikes. The so-called dot plot pointed to two rate hikes by the end of 2023 as against policymakers projection for no increase until 2024 in the March meeting. This, along with the overnight solid rebound in the US Treasury bond yields, further underpinned the greenback.
Adding to this, a generally softer tone around the equity markets also benefitted the greenback's relative safe-haven status and acted as a headwind for the perceived riskier aussie. With the latest leg down, the AUD/USD pair has now eroded a major part of the overnight gains and seems vulnerable to slide further. That said, slightly overstretched conditions warrant some caution before placing aggressive bearish bets.
Market participants now look forward to the US economic docket – featuring the second-tier releases of Existing Home Sales and Richmond Manufacturing Index. The key focus, however, will remain on the Fed Chair Jerome Powell's testimony before the House Select Subcommittee on the Coronavirus Crisis. Apart from this, the US bond yields will influence the US price dynamics and allow traders to grab some short-term opportunities around the AUD/USD pair.
Technical levels to watch
|Today last price||0.75|
|Today Daily Change||-0.0033|
|Today Daily Change %||-0.44|
|Today daily open||0.7533|
|Previous Daily High||0.7547|
|Previous Daily Low||0.7477|
|Previous Weekly High||0.7727|
|Previous Weekly Low||0.7477|
|Previous Monthly High||0.7892|
|Previous Monthly Low||0.7674|
|Daily Fibonacci 38.2%||0.752|
|Daily Fibonacci 61.8%||0.7504|
|Daily Pivot Point S1||0.7491|
|Daily Pivot Point S2||0.745|
|Daily Pivot Point S3||0.7422|
|Daily Pivot Point R1||0.7561|
|Daily Pivot Point R2||0.7589|
|Daily Pivot Point R3||0.763|
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.