- A softer tone around the USD helps AUD / USD regain traction on Thursday.
- A modest rally in US bond yields limits the USD’s slide and limits gains on the pair.
- The focus and attention on Wednesday will continue to be Fed Chairman Jerome Powell’s scheduled speech.
The pair AUD/USD it is moving higher during the European session on Thursday, staying comfortably above the 0.7600 level and recovering some of the losses from the previous day. At the time of writing, the pair is close to its daily highs around the 0.7640 region.
The pair has once again shown some resistance near the 0.7600 level and managed to regain some positive traction on Thursday amid a softer tone around the US dollar. However, a combination of factors has limited any further gains for the AUD / USD pair and has led to some selling at higher levels.
As investors looked past the minutes of Wednesday’s FOMC meeting, a modest rally in US Treasury yields has offered some support for the USD. Apart of this, cautious sentiment in stock markets has done further to limit the rise of the Aussie dollar of higher perceived risk, at least for now.
The Fed reiterated its commitment to keep interest rates low until the US economy recovers more safely. However, investors appear to be convinced that a stronger US economic recovery and a possible spike in US inflation will force the Fed to start tightening policy earlier than expected.
The optimistic outlook for the US economic recovery has been maintained backed by the impressive rate of vaccination against the coronavirus and the infrastructure spending plan of the US president., Joe Biden. This, in turn, has raised doubts that the Fed will keep interest rates ultra-low for a longer period.
Therefore, the focus of attention now shifts to the Fed chairman’s scheduled speech, Jerome Powell, later during the American session. His comments will be closely scrutinized for clues on the central bank’s monetary policy outlook, which will influence the USD and provide new directional momentum to the pair.
Meanwhile, investors will face the release of the US Initial Weekly Unemployment Claims. This, coupled with US bond yields and broader market risk sentiment, could allow investors to seize some short-term opportunities at the start of the US session.
AUD / USD technical levels
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