- 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
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.