- The sustained sell bias around the USD helps AUD / USD rebound from an initial dip below the 0.7400 level.
- Risk aversion limits any significant rise to the higher perceived risk AUD.
- Investors are waiting for the release of the PPI and comments from Fed Chairman Powell to get some momentum.
The pair AUD / USD has recovered from a dip to an intraday low of 0.7390 and has risen to new daily highs in the last hour, though it lacks any continuation. At the time of writing, the pair is trading at 0.7423, virtually unchanged on the day.
a Weaker sentiment around equity markets put some pressure on the Aussie higher perceived risk during the early part of trading action on Tuesday. That said, the current US dollar retracement decline helped the AUD / USD to rally around 30-35 from the Asian session lows near the 0.7390 region.
The USD extended its pullback from the highs after the NFP and it was pressured by pessimistic prospects from the Fed, where monetary policymakers were in no rush to increase borrowing costs. This, coupled with risk aversion in the markets, triggered a further decline in US Treasury yields and weighed further on the USD.
Having said that, Investors still seem convinced that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation.. The speculation was further fueled by upbeat comments the day before from plenty of FOMC members, signaling that the central bank could raise rates by the end of 2022.
Therefore, the market focus remains on the Wednesday’s release of the latest consumer CPI inflation figures in United States. The data will influence the Fed’s rate hike expectations and determine the short-term trajectory for the USD. This seemed to be the only factor that could prevent investors from opening aggressive bullish positions around the AUD / USD pair.
Meanwhile, investors will take the indications Tuesday of the release of the US PPI producer price index and statements by Fed Chairman Jerome Powell, in an online conference later at the start of the American session. Aside from this, US bond yields and broader market risk sentiment could provide some boost to the AUD / USD pair.
AUD / USD technical levels
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