- AUD/USD lower on Wednesday, pressured by a combination of factors.
- Weaker Aussie CPI raises stakes for a pause in RBA rates and weighs on the Aussie.
- Rising US bond yields reignite demand for dollars and further contribute to the decline.
The pair AUD/USD comes under further selling pressure on Wednesday and reverses much of the previous day’s positive move. The pair maintains its offered tone during the early hours of the North American session and is currently near the lower end of its daily range, around the 0.6670-0.6660 area.
The Australian dollar began to lose ground in reaction to softer-than-expected domestic consumer inflation numbers, fueling speculation that the Reserve Bank of Australia (RBA) may pause its rate hike cycle in the April meeting. Indeed, the Australian Bureau of Statistics (ABS) reported that headline CPI slowed from 7.4% in the prior month to 6.8% in the year to February, marking the slowest rise since June 2022. This, along with A modest pickup in demand for the US dollar (USD) is seen putting some downward pressure on the AUD/USD pair.
After posting losses in the past two days, the USD is regaining some positive traction amid a further rise in US Treasury yields. Easing fears of a full-blown banking crisis continue to lift the dollar. US bond yields rise. However, the less aggressive outlook from the Federal Reserve could hurt US bond yields and the dollar. It should be recalled that last week the US central bank softened its approach to reining in inflation and signaled that a pause in interest rate hikes was in sight following the recent turmoil in the banking sector.
Beyond this, prevailing risk appetite, reflected in a strong rally at the open in US equity markets, could cap gains for the safe-haven dollar and provide some support for the sensitive Australian dollar. to risk. This, in turn, makes it prudent to wait for strong follow-through selling before positioning for any further AUD/USD lower move. Even from a technical standpoint, recent price developments over the past two months point to indecision about the next leg of a directional move and warrant some caution on the part of bearish traders.
Technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
