- A combination of factors some intraday selling around AUD / USD on Tuesday.
- Renewed USD demand acts as a headwind for the pair amid the prevailing cautious sentiment.
- The lack of continuation selling below 0.7250 warrants caution for bears.
The pair AUD/USD It has quickly recovered around 25 pips from the daily lows touched at the start of the European session and is trading, at the time of writing, around the region 0.7275-80.
Having struggled to find acceptance above the 0.7300 level, the pair AUD / USD came under renewed selling pressure on Tuesday And it has been affected by a combination of factors. The US dollar has captured some new purchases and has approached a one-year high. Apart from this, the cautious sentiment prevailing in the markets has further affected the Aussie May perceived risk.
The USD has continued to receive support from firm expectations that the Fed would begin reversing its massive pandemic-era stimulus as early as November.. Markets also appear to have started pricing prospects for a rate hike in 2022. This, coupled with a rally in US Treasury yields, has supported the US dollar and put pressure on the AUD pair. / USD.
Meanwhile, the concerns that continued rising oil and energy prices will fuel inflation and derail economic recovery The global economy has weighed on investors’ appetite for perceived riskier assets. This has been evident by weaker sentiment around the stock markets, which has further benefited the safe-haven USD and acted as a headwind for the AUD / USD pair.
Early this Tuesday, the Reserve Bank of Australia left official cash rate unchanged at the all-time low of 0.10%. In the accompanying statement, RBA Governor Philip Lowe reiterated that the central bank will leave interest rates intact until inflation rises sustainably within the 2-3% target range and did little to give the pair any boost. AUD / USD.
Despite the fundamental bearish backdrop, AUD / USD has shown some resilience below 07250. This, in turn, makes it prudent to wait for a strong continuation sell below the mentioned level before positioning itself for the resumption of the recent bearish trajectory from the monthly highs in September around the 0.7475-80 region.
Market participants await the US economic calendar, which highlights the release of ISM’s services PMI. Aside from this, US bond yields and a scheduled speech by Fed Governor Randal Quarles could influence price dynamics around the USD. Investors will take cues from the broader market risk sentiment to seize some short-term opportunities around the AUD / USD pair.
AUD / USD technical levels
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