- AUD / USD struggled to preserve its intraday gains and witnessed a turnaround on Wednesday.
- A modest pullback in equity markets benefited the dollar as a safe haven and put pressure.
- Falling US bond yields limited the rise in the USD and could help the pair suffer further losses.
The pair AUD/USD it fell to fresh daily lows, below the key psychological level 0.7500 during the early part of the European session, although it lacked continued selling.
As investors looked past Australia’s upbeat consumer inflation figures, the AUD / USD pair witnessed an intraday shift on Wednesday and fell nearly 50 pips from daily highs. A slight deterioration in global risk sentiment, as shown by a pullback in equity markets, benefited the safe-haven US dollar and shifted flows away from the perceived riskier Australian dollar.
Meanwhile, the push from risk reduction in the markets triggered a further decline in US Treasury yields amid uncertainty about the likely timing of the Fed’s policy tightening. In fact, the 10-year US government bond yield fell below 1.60%, which prevented the USD bulls from making aggressive bets and should limit any deeper corrective declines for the AUD / USD pair.
Market participants are now looking forward to the US economic agenda, highlighting the release of Durable Goods Orders data for a bit of momentum later during the early days of the American session. This, along with US bond yields and broader market risk sentiment, will influence USD price dynamics and produce some short-term trading opportunities around the AUD / USD pair.
Beyond this, Thursday’s third-quarter US GDP preview report and the underlying US PCE price index on Friday will set the tone for the RBA and US monetary policy meetings. FOMC next week. Against the backdrop of fears of a faster-than-expected rise in inflation, fresh clues that central banks are becoming more cautious should help investors determine the short-term trajectory of the AUD / USD pair.
Technical levels
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