- The Aussie dips to 0.7500 after failing at 7545/50.
- The risk-sensitive AUD is losing ground as market sentiment worsens.
- AUD / USD could extend losses if the 0.7550 resistance limits.
The AUD has been rejected again at the 0.7545 / 55 resistance zone again, and the pair has given away Thursday’s gains, returning to the 0.7500 zone. The Australian dollar is heading lower on Friday, with the US dollar strengthening across the board.
The US dollar recovers as market sentiment turns sour
The AUD has been unable to maintain the bid tone shown for the past four days and is retreating against a firmer dollar. The USD is taking advantage of its safe haven status amid deteriorating market sentiment and firmer US Treasury yields.
Risk appetite took a hit on Thursday after the Commerce Department revealed that the US economy slowed beyond expectations. These figures have dampened optimism about a strong post-pandemic recovery, which is hitting equity markets and risk-sensitive currencies like the Australian dollar.
On the macroeconomic calendar, US personal consumption spending, the Fed’s preferred indicator of inflation, rose 3.6% year-on-year in September, adding pressure on the central bank to accelerate its policy normalization plan. Yields on US Treasuries have risen on these figures, thus increasing demand for the US dollar.
In Australia, retail sales recovered strongly in September after having plummeted for the previous three months, as easing of COVID-19 restrictions has helped consumers hit the shops.
AUD / USD: Directed lower if resistance tops 0.7550 – Citibank
Citibank’s currency analytics team warns that failure to break the 0.7550 resistance could trigger a significant reversal: “The RBA decided not to defend its 3-year yield target of 0.1%, causing the April 2024 bond to fall. will shoot. This has increased the conviction that the RBA can change its orientation towards the future more aggressively. However, as the reflation bets shift towards stagflation, the Australian struggles, particularly with the pullback in commodity prices that has kept him supported throughout the month (…) Add to that the Usual offer in USD at the end of the month and risk / reward in AUD / USD seems more skewed to the downside, with 0.7550 providing firm resistance. “
Technical levels
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