- AUD/USD is set to end the week with gains, rising 1.54%.
- The unstable sentiment keeps AUD/USD oscillating in a 50-70 pip range.
- AUD/USD will remain below 0.7000 according to the National Australia Bank.
The rally of AUD/USD It is showing signs of losing steam, but remains on the upside after posting its first day of losses in the last five on Wednesday, although at the time of writing, it is posting a minimal gain of 0.14%. AUD/USD is trading at 0.6897 in a session characterized by fragile sentiment.
Thursday’s AUD/USD price action saw the pair open around 0.6880, down from 0.6900. However, it rose to a daily high of 0.6916 before pulling back to the 0.6850 area, reaching a daily low of 0.6858; once the dust settled, it is trading at current levels.
AUD/USD wobbles as sentiment swings amid volatile session
Sentiment remains fragile, changing throughout the day. The ECB’s first hike in 11 years, the looming global economic slowdown, led by China, and US recession fears lingering on traders’ minds, keep riskier assets on the back foot. A reflection of this is the swing of the AUD/USD in a range of 50-70 pips, with no apparent bias. However, in times of recession, the dollar is king.
Meanwhile, and in line with recent news about hiring suspensions by US companies, specifically Apple, Google and Ford, the US Department of Labor revealed that initial jobless claims for the week ending July 16 they increased by 251,000, more than the estimated 240,000, reaching a new 8-month high. Claims increased as the Federal Reserve is raising interest rates to curb persistent inflation. However, it is a consequence that American workers would have to deal with until the US central bank begins to see inflation slowing.
Meanwhile, the Philadelphia Fed manufacturing index in June fell for the second consecutive month to -24.8 from -12.4. The report says that “in general, companies continued to report increases in employment, but the employment index decreased 9 points to 19.4, the lowest reading since May 2021.”
On the Australian side, Reserve Bank of Australia (RBA) Governor Philip Lowe stressed that higher rates would be needed to anchor inflation expectations, he said on Wednesday.
AUD/USD will remain below 0.7000 according to National Australia Bank
“We believe the dollar has yet to peak given the Federal Reserve’s hawkish stance and growing concerns about an impending global recession,” analysts at National Australia Bank said in a note.
“Our view on a stronger dollar for longer implies a longer period below 0.70 for the Aussie/dollar, with the currency contained in a range of $0.65-0.70 in the coming quarters.”
AUD/USD Key Technical Levels
Source: Fx Street
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