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AUD/USD falls to two-year lows below 0.6450 after risk aversion momentum

  • AUD/USD posts two straight days of losses, down 1.2% on Monday.
  • Risk aversion triggered by central bank tightening and UK tax cuts amn sentiment; consequently, the dollar is rising.
  • Fed officials continue to insist that inflation is “too high.”

The AUD/USD falls almost 1%, due to the strength of the dollar, amid flows seeking the safety of the USD, which rises against most of the G8 currencies due to concerns that the tightening of central banks around the world world, could trigger a recession.

AUD/USD started trading around 0.6515 before hitting the daily high of 0.6537. However, as sentiment continued to sour, the pair fell towards a fresh two-year low around 0.64426, breaking below the May 20, 2020 low at 0.6452. At the time of writing, the AUD/USD is trading 0.6444 below its opening price.

AUD/USD falls to fresh 2-year lows on US dollar push

Recession fears around the world have increased since the US Federal Reserve raised rates by 75 basis points last week. This, coupled with speculation on the UK economy, is keeping the Bank of England (BoE) under pressure, taking sterling to a new year-to-date low. At the same time, most G8 currencies followed suit, weakening against the already strong US dollar.

On the US economic calendar was the Chicago National Activity Index for August, which slowed to 0. Meanwhile, some Fed speakers are crossing the news wires.

On Sunday, Atlanta Fed President Raphael Bostic said he believes the Fed can tame inflation without substantial labor market losses given the current economic slowdown. He says that inflation is “too high”, adding that the US central bank must do everything possible to control it.

Earlier, Boston Fed President Sussan Collins said the unemployment rate has to be higher for the Fed to achieve its inflation target. Collins added that she would like to have “clear and convincing signs” that inflation is cooling off, while she said “a major economic or geopolitical event could push our economy into a recession as policy tightens further.” “.

Westpac analysts lowered the AUD/USD exchange rate target from 0.6900 to 0.6500. “That means that in the remainder of 2022, there will be periods where the AUD trades below the $0.65 level, given the high volatility of the currency markets to date.”

AUD/USD Key Technical Levels

AUD/USD

Overview
last price today 0.6444
Today I change daily -0.0068
Today’s daily variation in % -1.04
Daily opening today 0.6526
Trends
daily SMA20 0.6755
daily SMA50 0.6876
daily SMA100 0.6927
daily SMA200 0.7094
levels
Previous daily high 0.6656
Previous Daily Low 0.6512
Previous Weekly High 0.6748
Previous Weekly Low 0.6512
Previous Monthly High 0.7137
Previous Monthly Low 0.6835
Daily Fibonacci of 38.2% 0.6567
Daily Fibonacci of 61.8% 0.6601
Daily Pivot Point S1 0.6473
Daily Pivot Point S2 0.642
Daily Pivot Point S3 0.6329
Daily Pivot Point R1 0.6617
Daily Pivot Point R2 0.6709
Daily Pivot Point R3 0.6762

Source: Fx Street

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