- AUD/USD continues to be weighed down by the lower-than-expected RBA rate hike of 25 basis points.
- The selling trend of the dollar offers some support to the pair and helps to limit the decline.
- Falling US bond yields and risk appetite are weighing on the safe-haven dollar.
The pair AUD/USD struggles to capitalize on its intraday move to 1-week highs and meets fresh bid near 0.6550 on Tuesday. The pair maintains its offered tone throughout the early American session and is currently hovering around the 0.6475 area, just a few points above the daily low.
The Australian dollar continues to be weighed down by the fact that the Reserve Bank of Australia (RBA) delivered a dovish surprise and raised the cash rate by 25 basis points. The rise was less than the 50 basis points already priced into the markets and disappointed investors, which, in turn, is seen as a key factor weighing on the AUD/USD pair.
However, the downtrend remains muted, at least for now, amid the prevailing selling trend around the US dollar. US Treasury yields continue their recent pullback from multi-year highs reached last week. This, coupled with the risk boost, undermines the safe-haven dollar and benefits the risk-sensitive Aussie.
Despite this support, the AUD/USD pair has, thus far, struggled to attract significant buying. This, in turn, suggests that the path of least resistance for spot prices is to the downside. Therefore, the pair is likely to return below the 0.6400 signal, to retest last year’s low near the 0.6365 area.
Below is the US economic docket, with JOLTS data on job openings and factory orders. This, along with speeches from influential FOMC members and US bond yields, will influence dollar price dynamics and provide some momentum to the AUD/USD pair. Traders will follow signals from broader risk sentiment to take advantage of short-term opportunities.
Technical levels to watch
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
