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AUD/USD weakens further as US Treasury yields boost US Dollar

  • AUD/USD drops 0.26%, pressured by higher US Treasury yields and risk aversion, contributing to a 0.70% two-day decline.
  • RBA keeps rates steady; nuanced inflation comments lead to negative market reaction for AUD/USD.
  • US Fed caution echoed by Boston Fed President Susan Collins, warning against premature rate cuts amid September cut expectations.

The Australian Dollar extended its losses against the US Dollar for the second straight day, as higher US Treasury bond yields underpinned the Greenback. On Wednesday, the AUD/USD lost 0.26% as market participants turned risk-averse ahead of the release of further US data during the rest of the week, followed by next week’s inflation report. As the Asian session begins, the pair trades at 0.6577, virtually unchanged.

AUD/USD dips amid rising US yields and cautious market sentiment ahead of key economic data releases.

The financial markets remain strictly focused on when the major central banks would ease policy. on Tuesday, the Reserve Bank of Australia (RBA) decided to keep rates unchanged, though slightly tweaked their statement, mentioning that inflation is indeed cooling. Despite adding that “the Board is not ruling anything in or out,” AUD/USD traders punished the Aussie Dollar, as it has lost close to 0.70% in the last two days.

RBA’s Governor Michele Bullock maintained a balanced tone at the press conference. Regarding rates, she mentioned that "we might have to raise, we might not," indicating the board's contemplation of rate hikes at this meeting.

On the US front, Federal Reserve officials continued to cross the newswires. Boston Fed President Susan Collins stated that she expects demand to slow down to bring inflation to the Fed’s 2% goal. She added that there are risks of cutting rates “too soon” and mentioned that the current policy is well-positioned and that it is “moderately restrictive.”

Regarding interest rate expectations, the swaps market has largely discounted any further RBA rate hikes over the next six months, with a decrease priced in for the subsequent six months.

On the US front. the CME FedWatch Tool shows that odds for a quarter-percentage-point cut in September by the Fed increased from 55% last week to 85% as of writing.

AUD/USD Price Analysis: Technical outlook

From a daily chart perspective, the pair is neutral to upward biased, though buyers need to surpass the latest cycle high seen at 0.6667 the March 8 high, which could exacerbate a rally toward 0.6700. Once cleared, the next resistance level would be the December 28 high at 0.6871. On the other hand, if sellers push prices below the 100-day moving average (DMA) at 0.6577, subsequent losses are awaited. The next demand level would be the 50-DMA at 0.6535, followed by the 200-DMA at 0.6515.

AUD/USD

Overview
Today last price0.658
Today Daily Change-0.0017
Today Daily Change %-0.26
Today daily open0.6597
 
Trends
Daily SMA200.6504
Daily SMA500.6536
Daily SMA1000.658
Daily SMA2000.6522
 
Levels
Previous Daily High0.6638
Previous Daily Low0.6587
Previous Weekly High0.6649
Previous Weekly Low0.6465
Previous Monthly High0.6644
Previous Monthly Low0.6362
Daily Fibonacci 38.2%0.6606
Daily Fibonacci 61.8%0.6618
Daily Pivot Point S10.6577
Daily Pivot Point S20.6556
Daily Pivot Point S30.6526
Daily Pivot Point R10.6628
Daily Pivot Point R20.6659
Daily Pivot Point R30.6679

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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