AUD/USD pulls back below 0.7250 as risk appetite weakens

  • AUD/USD fell back below 0.7250 in recent trading as risk appetite deteriorates, after failing to test 0.7300.
  • But the Australian dollar continues to perform well against most G10 peers given its exposure to rising commodity prices.

The AUD/USD managed to test last week’s highs at 0.7280 in earlier trades but failed to challenge the 0.7300 level and has since traded lower for the day below 0.7250. At the time of writing, the pair is down around 0.2% on the day.

While Tuesday’s risk-off market conditions are mostly benefiting stocks like the US dollar and Japanese yen, commodity-sensitive currencies like the Australian dollar, Kiwi and Canadian dollar are also performing. well. In fact, the Australian dollar ranks third in terms of G10 daily performance, with market commentators noting that oil, LNG, coal, wheat, nickel, aluminum and iron ore are supportive. .

The RBA rate decision was hardly talked about or thought about on Tuesday, although it was moderately tilted (the bank flagged the Ukraine war and sanctions as a new risk), it did not affect AUD/USD price action. Australian fourth-quarter trade figures were also no better than expected, which analysts say prompted them to raise their fourth-quarter GDP growth forecasts (data due Wednesday).

For now, traders should prepare for continued turmoil in AUD/USD, though they should expect the pair to outperform EUR/USD and GBP/USD, mostly due to Australia’s geographic distance from the war zone. and fewer trade ties with Russia. AUD/USD may not be ready to break above 0.7300 amid safe haven demand for the US dollar, but is likely to remain well supported above 0.7100 lows from last week.

Technical levels

Source: Fx Street

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