- AUD/USD rises for the second day in a row and hits a new multi-month high.
- The appearance of strong selling around the dollar is seen as a tailwind for the major pairs.
- Increased bets on a further rate hike by the RBA remain supportive of the positive move.
- Traders are looking forward to the US PPI and monthly Retail Sales data for further impetus.
For the second day in a row, the pair AUD/USD gains ground and continues to rise in the middle of the European session. The positive momentum lifts the pair to the 0.7035 zone, or the highest level since August 16 and is supported by the strongly offered tone surrounding the US dollar.
Indeed, the dollar index, which tracks the dollar against a basket of currencies, is nearing the seven-month low hit earlier this week and is coming under pressure from a combination of factors. The prospects of lower interest rate hikes by the Fed cause a further drop in US Treasury bond yields. Beyond this, the generally positive tone around equity markets further weakens the safe-haven dollar and benefits the risk-sensitive Australian dollar.
Investors turned optimistic in the hope that the new stimulus measures announced by the Chinese government will lead to a strong recovery in the world’s second largest economy. Aside from this, the increased odds of a further Reserve Bank of Australia (RBA) rate hike in February lend some support to the national currency and act as a tailwind for the AUD pair. /USD. The positive move on Wednesday could also be attributed to technical buying above the key psychological level of 0.7000.
The aforementioned fundamental background favors bullish traders and supports the prospects for a further appreciation move in the short term for the AUD/USD pair. Therefore, any significant corrective pullback could be seen as a buying opportunity and is more likely to remain limited. Market Participants now await the US economic calendar, highlighting the release of the Producer Price Index and monthly Retail Sales data for short-term trading opportunities.
Technical levels to watch
|Last price today||0.7024|
|Today I change daily||0.0038|
|today’s daily variation||0.54|
|today’s daily opening||0.6986|
|previous daily high||0.6997|
|previous daily low||0.693|
|Previous Weekly High||0.6994|
|previous weekly low||0.686|
|Previous Monthly High||0.6893|
|Previous monthly minimum||0.6629|
|Fibonacci daily 38.2||0.6971|
|Fibonacci 61.8% daily||0.6956|
|Daily Pivot Point S1||0.6945|
|Daily Pivot Point S2||0.6904|
|Daily Pivot Point S3||0.6877|
|Daily Pivot Point R1||0.7012|
|Daily Pivot Point R2||0.7038|
|Daily Pivot Point R3||0.708|
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.