- AUD/USD falls to a multi-week low on Monday and is under pressure from a combination of factors.
- Bets on aggressive Fed rate hikes and high US bond yields push the dollar to a 20-year high.
- The risk-averse environment also benefits the dollar, which is a safe haven, and weighs on the risk-sensitive Aussie.
The pair AUD/USD suffers from some follow-through on Monday and drops to a six-week low during the early part of the European session. Currently, the pair is trading around 0.6800 points. Spot prices have retraced more than 150 pips from levels just above the key psychological 0.7000 level touched on Friday amid a rally in the US dollar.
The dollar index, which measures the greenback against a basket of currencies, soared to a new 20-year high amid expectations of more aggressive policy tightening by the Fed. pricing in the possibility of a 75 basis point Fed rate hike in September, with bets bolstered by Fed Chairman Jerome Powell’s remarks on Friday.
During his Jackson Hole speech, Powell dashed hopes of a dovish turnaround, signaling that interest rates would stay higher longer to curb rising inflation. A further rise in US Treasury yields bolsters market expectations, which, coupled with the risk-off mood, provides additional support for the safe-haven dollar and weighs on the Aussie. risk sensitive.
The combination of the above factors offset the upbeat data for Australian retail sales, which far exceeded expectations and rose 1.3% in July. Even the prospect of a further 50 basis point rate hike by the Reserve Bank of Australia at its upcoming September 6 monetary policy meeting failed to impress bullish traders or give AUD/USD a break, favoring bearish traders.
Technically, the outlook favors bearish bets. A two-bar reversal pattern has formed on the weekly chart after last week’s bearish long bar followed last week’s bullish long bar, and this is likely to lead to another leg of selling down. Furthermore, the 50-week SMA is dipping ever closer to the 200-week SMA (which capped the last rally) and threatens to become a bearish “death cross” for the next several weeks. If he succeeds, it will be another black dot on the pair marker.
The strong bullish sentiment prevailing around the dollar adds credence to the negative short-term outlook, especially in the absence of any major economic releases from the US. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside and any significant recovery attempts could now be seen as a selling opportunity.
|Last Price Today||0.6898|
|Today’s Daily Change||-0.0014|
|Today’s Daily Change %||-0.20|
|Today’s Daily Opening||0.6912|
|20 Daily SMA||0.697|
|50 Daily SMA||0.6916|
|100 Daily SMA||0.7028|
|200 Daily SMA||0.7133|
|Previous Daily High||0.701|
|Previous Daily Minimum||0.6888|
|Previous Maximum Weekly||0.701|
|Previous Weekly Minimum||0.6855|
|Monthly Prior Maximum||0.7033|
|Previous Monthly Minimum||0.668|
|Daily Fibonacci 38.2%||0.6934|
|Daily Fibonacci 61.8%||0.6963|
|Daily Pivot Point S1||0.6863|
|Daily Pivot Point S2||0.6814|
|Daily Pivot Point S3||0.6741|
|Daily Pivot Point R1||0.6985|
|Daily Pivot Point R2||0.7059|
|Daily Pivot Point R3||0.7108|
Source: Fx Street
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