- The Australian dollar falls to the mercy of a US central bank seeking to reduce its balance sheet.
- Initial jobless claims in the United States rose more than expected, but remain at a five-decade lows.
- AUD / USD Technical Outlook: The pair has a bearish bias and could soon test the 0.7100 level.
In the American session, the AUD/USD declines for the second day of the week on the FOMC Minutes, along with a surge in U.S. Treasury yields, with the 10-year yield above 1.70%, the highest level since April 2021. At the time of writing, the pair is trading at 0.7161.
Initial U.S. Unemployment Claims Increased More Than Estimated
Initial U.S. jobless claims for the week ending January 1, 2022 increased by 207,000 more than the 197,000 estimated by economists. The increase of 10,000 claims in the first week of the year affected the 4-week average, which exceeded 204,500, up from 199,750 the previous week. Despite the surge, jobless claims have hovered near a five-decade low in recent weeks.
That said, on Wednesday, the US central bank revealed in its December Minutes that no monetary policy tightening was needed and that a more rapid reduction of its QE program was required before raising rates. In addition, the Fed’s policy makers began to argue about a contraction of its balance sheet, which was perceived by an aggressive signal from the markets, with investors selling shares aggressively. At the same time, US Treasury yields rose, with the decade reaching its highest level since April 2021.
Additionally, US money market futures have an 80% chance of a rate hike at the March 2022 meeting. Meanwhile, the US dollar index, which measures the value of the dollar against six rivals , remains lateralized at 96.16.
AUD / USD Price Forecast: Technical Outlook
The AUD / USD daily chart shows the pair with a bearish bias, as the daily moving averages (DMAs) are above price, with a downward slope acting as dynamic resistance levels. Furthermore, at press time, the pair traversed an ascending trend line drawn from December 6, 2021, daily low to December 20, 2021, low, which opened the door for a test of the latter at 0. , 7082, but it would encounter some obstacles on its way down.
The first support level for AUD / USD would be the psychological level of 0.7100. A breakout of the latter would cause the pair to fall towards the December 20, 2021 cycle low at 0.7082.
Additional technical levels
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