- The AUD/USD pair reverses an intraday decline on Monday, though it lacks any follow-through buying.
- Bets on a further 25 basis point Fed rate hike in June support the dollar and limit the pair’s gains.
- In the United States, the ISM Services PMI will be published, and the RBA will be published on Tuesday.
The pair AUD/USD it attracts some dip buying near the 0.6580 area and rises to the upper end of its intraday trading range during the early hours of the North American session on Monday. The pair is currently trading just above 0.6600 and holding close to the 2-week high hit on Friday.
A private sector survey showed on Monday that activity in Chinese services picked up in May, raising hopes for a recovery in the world’s second-largest economy. On the other hand, speculation that the Reserve Bank of Australia (RBA) could tighten its monetary policy further provides some support for the Australian dollar. However, the bullish outlook for the AUD/USD pair looks limited, at least for now, as traders seem reluctant to make any aggressive bets ahead of Tuesday’s RBA meeting. Aside from this, a strong US dollar (USD) buying trail further contributes to limiting the pair.
Indeed, the USD (DXY) index, which tracks the dollar against a basket of currencies, builds on Friday’s nice post-NFP rebound from more than a week lows and continues to gain traction for the second day in a row amid of expectations of further rate hikes by the Federal Reserve. In fact, current market prices indicate a 30% probability of another 25 basis point hike at the end of the FOMC’s two-day policy meeting on June 14. This continues to support a further rise in US Treasury Yields, which supports the dollar and curbs further bets by AUD/USD bulls.
Ahead of the key central bank appointment, the aforementioned mixed fundamental background warrants some caution before positioning yourself in favor of an extension of AUD/USD’s recent rally from the multi-month low hit last week. Meanwhile, the US ISM Services PMI will be released on Monday. This, along with US bond yields, will influence USD price dynamics and create short-term trading opportunities around the pair.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
