- AUD/USD is reversing an intraday decline to a more than three-month low hit on Monday.
- Risk appetite is acting as a headwind for the safe haven USD and extending some support.
- The upside looks limited ahead of the RBA decision on Tuesday and the FOMC on Wednesday.
The pair AUD/USD managed to recover almost 50 pips from a low of more than three months and rose to a new daily high, around the region of 0.7080 during the first half of the European session.
Disappointing Chinese PMI data released over the weekend fueled fears of a sharp slowdown in the world’s second-largest economy and weighed on China’s proxy Australian dollar. This, coupled with some intraday US dollar buying, dragged the AUD/USD pair to its lowest level since March, although the intraday decline stalled near the 0.7030 region.
A generally positive tone around equity markets benefited the perceived riskier Aussie and acted as a headwind for the safe-haven USD. Aside from this, speculation that the Reserve Bank of Australia may raise the official target cash rate on Tuesday in the wake of last week’s sharp rise in inflation, extended support for the AUD/USD pair.
That said, any significant upside still looks elusive as investors may refrain from making aggressive bets ahead of this week’s key event/central bank data risks. The RBA is scheduled to announce its monetary policy decision during the Asian session on Tuesday. However, the market’s focus will remain glued to the outcome of a two-day FOMC meeting.
The US central bank is universally expected to adopt a more aggressive policy response to curb runaway inflation and raise interest rates by 50 bps. Aside from this, investors will be looking for clues on the Fed’s plan for balance sheet reduction and guidance on future interest rate hikes. This would act as a catalyst and have a significant effect on global markets.
Meanwhile, traders eagerly await the US economic docket, with the release of the US ISM Manufacturing PMI to be released later in the early American session. This coupled with US bond yields and broader market risk sentiment will influence USD price dynamics and produce some trading opportunities around the AUD/USD pair.
Technical levels
AUD/USD
| Panorama | |
|---|---|
| Last Price Today | 0.7061 |
| Today’s Daily Change | 0.0000 |
| Today’s Daily Change % | 0.00 |
| Today’s Daily Opening | 0.7061 |
| Trends | |
|---|---|
| 20 Daily SMA | 0.7355 |
| 50 Daily SMA | 0.7351 |
| 100 Daily SMA | 0.7262 |
| 200 Daily SMA | 0.7288 |
| levels | |
|---|---|
| Previous Daily High | 0.718 |
| Previous Daily Minimum | 0.7058 |
| Previous Maximum Weekly | 0.7257 |
| Previous Weekly Minimum | 0.7054 |
| Monthly Prior Maximum | 0.7662 |
| Previous Monthly Minimum | 0.7054 |
| Daily Fibonacci 38.2% | 0.7105 |
| Daily Fibonacci 61.8% | 0.7133 |
| Daily Pivot Point S1 | 0.702 |
| Daily Pivot Point S2 | 0.6978 |
| Daily Pivot Point S3 | 0.6898 |
| Daily Pivot Point R1 | 0.7142 |
| Daily Pivot Point R2 | 0.7222 |
| Daily Pivot Point R3 | 0.7264 |
Source: Fx Street
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