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AUD/USD remains bearish below 0.6900, looks vulnerable near 1-week lows

  • AUD/USD remained under some selling pressure for the second day in a row on Thursday.
  • The aggressive expectations of the Fed acted as a tailwind for the dollar and dragged the main currency lower.
  • Recession fears weighed on investor sentiment and undermined the risk-sensitive Aussie.

The pair AUD/USD witnessed some selling for the second day in a row on Thursday and fell to a one-week low around the 0.6870-0.6875 region during the early part of the European session.

Market sentiment remains fragile amid doubts that major central banks can raise interest rates to curb rising inflation without hurting economic growth. In addition, the disappointing release of the Eurozone PMI indices fueled concerns about a possible recession and continued to weigh on investor sentiment. This, in turn, was seen as a key factor acting as a headwind for the risk-sensitive Aussie.

Aside from this, a nice pickup in US dollar demand put some downward pressure on the AUD/USD pair. The prevailing cautious mood in the market offered some support to the USD, which was supported by expectations from the Federal Reserve. Markets seem convinced that the Federal Reserve will maintain its aggressive tightening policy to combat persistent inflation and offer another 75 basis points at its next meeting in July.

Fed Chairman Jerome Powell reaffirmed the market’s bets, saying on Wednesday that continued rate hikes will be appropriate. During his appearance before the Senate Banking Committee, Powell added that the Fed is firmly committed to reducing inflation and that the pace of future rate hikes will continue to depend on data. This, in turn, favors dollar bulls and supports the prospects for further short-term losses for the AUD/USD pair.

Even from a technical point of view, acceptance below 0.6900 could be seen as a new trigger for bearish traders. Therefore, a further slide to the monthly low around 0.6850 looks like a distinct possibility. The bearish trajectory could extend further towards the low of the year, around the 0.6830-0.6825 region touched in May. Next, US macroeconomic data will be released before the second day of Powell’s remarks.

On Thursday, the US economic docket includes the release of the usual weekly initial jobless claims, followed by flash PMI prints for June later in the early American session. Aside from this, Powell’s comments, US bond yields and broader market risk sentiment will influence dollar price action, producing short-term opportunities around the AUD/USD pair.

Technical levels

AUD/USD

Panorama
Last Price Today 0.6905
Today’s Daily Change -0.0022
Today’s Daily Change % -0.32
Today’s Daily Opening 0.6927
Trends
20 Daily SMA 0.7084
50 Daily SMA 0.7109
100 Daily SMA 0.7216
200 Daily SMA 0.7236
levels
Previous Daily High 0.6975
Previous Daily Minimum 0.6881
Previous Maximum Weekly 0.707
Previous Weekly Minimum 0.685
Monthly Prior Maximum 0.7267
Previous Monthly Minimum 0.6828
Daily Fibonacci 38.2% 0.6917
Daily Fibonacci 61.8% 0.6939
Daily Pivot Point S1 0.688
Daily Pivot Point S2 0.6833
Daily Pivot Point S3 0.6785
Daily Pivot Point R1 0.6974
Daily Pivot Point R2 0.7022
Daily Pivot Point R3 0.7069

Source: Fx Street

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