- AUD/USD is trading in a tight range around the round 0.6900 level.
- A rebound in US bond yields helps reignite demand for the USD and caps the pair’s rally.
- Less hawkish Fed rate hike expectations constrain the USD and provide some support for the pair.
The pair AUD/USD moves slightly lower on Tuesday and consolidates its recent gains to the highest level since late August around 0.6950 touched the previous day. The pair is trading tepid gains/minor losses during the European session and now appears to have stabilized. close to the 0.6900 level.
A combination of factors is helping the US dollar to halt its recent slide and regain some positive traction, which in turn acts as a headwind for the AUD/USD pair. A modest rebound in US Treasury yields helps revive demand for the USD. On the other hand, the prevailing caution in the markets reinforces the US dollar as a safe haven and limits the rise of the risk-sensitive Australian dollar.
Despite the fact that China has abandoned its strict zero-covid policy, investors continue to Concerned that the massive influx of Chinese travelers could lead to a new surge in infections. In addition, the protracted war between Russia and Ukraine has fueled the concern about a deeper global economic recession. This, in turn, has an impact on risk sentiment, evidenced by a softer tone around equity markets.
Having said that, rising expectations for relatively minor rate hikes from the Federal Reserve could limit rises in US bond yields and the dollar. Dollar bulls also appear reluctant to enter aggressive positions ahead of Fed Chairman Jerome Powell’s speech, which will seek clues on the pace of rate hikes in upcoming meetings. This will play a key role in driving demand for the USD early in the American session today.
However, attention remains focused on the latest US consumer inflation figures, due to be released on Thursday, which will help determine the next directional move for the AUD/USD pair. However, the fundamental background suggests that the path of least resistance for the USD is to the downside. This, in turn, supports prospects for an extension of the recent bullish move in AUD/USD.
AUD/USD technical levels
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.
