Categories: Markets

AUD/USD pulls back from daily highs and falls towards the 0.6870 area

AUD/USD pulls back from daily highs and falls towards the 0.6870 area
  • AUD/USD hit a daily low around 0.6929 but tumbled as sentiment turns sour.
  • Global stocks fell as investors brace for Jerome Powell’s Fed speech on Friday.
  • China’s PBoC interest rate cut lifted AUD/USD to just above the 0.6900 figure before falling towards daily lows.

The AUD/USD trades back slightly in the American session, amid a risk-off tone in the market, with global equities down, as traders prepare for Fed Chairman Jerome Powell’s speech on Friday. The reflection of the above is the fall in global equities, led by US shares, which are down between 1.40% and 2.30%.

AUD/USD is trading at 0.6875, 0.02% below its opening price, after hitting a daily high of 0.6929, just above the 50-day EMA. However, the currency fell from 0.6900 due to the broad strength of the US dollar.

Meanwhile, the US Dollar Index, a gauge of the dollar’s value against a basket of peers, is up almost 0.60% to 108.729, pulling away from a year’s high of 10.9.294.

Meanwhile, a lack of economic data keeps traders focused on the Jackson Hole event. Notably, Fed policymakers continued to say last week that although inflation data is encouraging, the central bank is far from declaring victory. Even the more dovish, like Esther George of the Kansas City Fed, said further rate hikes are on the way, though they mentioned the size of the hikes is open to debate.

At the time of this writing, money market futures show that investors have fully priced in a 50 basis point rate hike by the Federal Reserve, while the odds of a 75 basis point hike are in the 82.8%.

Also, earlier in the Asian session, the People’s Bank of China (PBoC) cut its benchmark interest rate by 5 basis points, from 3.70% to 3.65%, to stimulate the economy. AUD/USD rose towards 0.6906 after China’s decision, which benefits the Australian economy as China is one of its main trading partners.

What must be considered

On the Australian economic docket, S&P global PMIs for August readings are expected to decline, except for services PMI. On the US side, the calendar will release S&P Global PMIs, a prelude to next week’s ISM PMI numbers, along with Fed speakers, led by Minnesota Fed’s Neil Kashkari, on Tuesday. , and the start of the Jackson Hole Economic Symposium on Wednesday.

AUD/USD Price Analysis: Technical Outlook

From a technical point of view, the AUD/USD pierced the 50-day EMA around 0.6916 but turned lower, threatening to turn negative on the day, exacerbating a drop towards the falling trendline of five months ago, which was previously a resistance zone and that changed support around 0.6800. A daily close below last week’s low at 0.6859 will pave the way for further losses.

Technical levels


Last Price Today 0.6882
Today’s Daily Change 0.0013
Today’s Daily Change % 0.19
Today’s Daily Opening 0.6869
20 Daily SMA 0.6982
50 Daily SMA 0.6919
100 Daily SMA 0.7057
200 Daily SMA 0.7142
Previous Daily High 0.6923
Previous Daily Minimum 0.6858
Previous Maximum Weekly 0.7129
Previous Weekly Minimum 0.6858
Monthly Prior Maximum 0.7033
Previous Monthly Minimum 0.668
Daily Fibonacci 38.2% 0.6883
Daily Fibonacci 61.8% 0.6898
Daily Pivot Point S1 0.6844
Daily Pivot Point S2 0.6818
Daily Pivot Point S3 0.6779
Daily Pivot Point R1 0.6908
Daily Pivot Point R2 0.6948
Daily Pivot Point R3 0.6973

Source: Fx Street