- AUD/USD witnessed a modest intraday pullback from one-month tops amid a modest USD rebound.
- An uptick in the US bond yields, a turnaround in the risk sentiment underpinned the safe-haven USD.
- Reduced Fed rate hike bets might cap gains for the USD and help limit the downside for the major.
The AUD/USD pair retreated around 40 pips from one-month tops and was last seen trading with only modest intraday gains, around the 0.7775 region.
The pair prolonged its recent strong positive momentum from sub-0.7600 levels and gained some follow-through traction through the first half of the trading action on Tuesday. The momentum pushed the AUD/USD pair to the highest level since March 18 and was sponsored by sustained US dollar selling bias. However, a combination of factors kept a lid on any further gains.
A goodish pickup in the US Treasury bond yields helped the USD to stall its recent sharp decline to six-week tops. Apart from this, a turnaround in the US equity futures extended some additional support to the safe-haven greenback. This, in turn, was seen as a key factor that capped gains for the perceived riskier aussie, rather prompted some selling around the AUD/USD pair.
That said, speculations that the Fed will keep interest rates near zero levels for a longer period might hold the USD bulls from placing aggressive bets and limit the downside for the AUD/USD pair. Investors seem convinced with the Fed's view that any spike in inflation is likely to be transitory and have been scaling back expectations for an earlier than anticipated lift-off.
Hence, it will be prudent to wait for some strong follow-through selling below the overnight swing lows, around the 0.7700 mark before confirming that the AUD/USD pair might have topped out in the near term. This will set the stage for the resumption of the prior corrective decline from the key 0.8000 psychological mark, or three-year tops touched on February 25.
There isn't any major market-moving economic data due for release from the US on Tuesday. Hence, the US bond yields will play a key role in influencing the USD price dynamics. Traders might further take cues from the broader market risk sentiment in order to grab some short-term opportunities around 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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.