- AUD/USD consolidates its recent losses and remains weak near the two-year low set on Tuesday.
- Recession fears and weakening commodity prices weigh on the perceived riskier AUD.
- Expectations for an aggressive rate hike from the Fed benefit the USD and limit the pair’s rise.
The pair AUD/USD has had a hard time taking advantage of the late bounce from the previous day, from two-year lows, and has attracted some selling near the 0.6820 area on Wednesday. The pair remains on the defensive at the start of the European session and is now trading around the level of 0.6800practically unchanged on the day.
Despite the Reserve Bank of Australia anticipating a 50 basis point interest rate hike on Tuesday, worsening global economic outlook acted as a headwind for the AUD, of higher perceived risk. In fact, the most aggressive measures by major central banks to curb rising inflation, the ongoing war between Russia and Ukraine, and the latest outbreak of COVID-19 in China have fueled fears of a recession. Also, the recent drop in commodity prices weighed on the Australian dollara currency linked to the prices of raw materials.
Secondly, US dollar held near two-decade highs and continued to receive support from the Expectations that the Fed will maintain its monetary policy tightening path. This was seen as another factor that helped limit the AUD/USD’s gains. However, the downside appears to have been cushioned, at least for now, as investors may prefer to stay on the sidelines ahead of the release of the FOMC policy meeting minutes, due later in the session. american.
Market participants will be looking for new clues on the Fed’s monetary policy outlook. In addition, the monthly US NFP employment report, to be released on Friday, will play a key role in the price dynamics of the Fed. dollar in the short term and will provide a new directional boost to the AUD/USD pair. Meanwhile, risky market sentiment could allow investors to take advantage of some short-term opportunities around the pair. However, the fundamental background supports the prospect of further short-term losses.
AUD/USD technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
