AUD / USD retraces further below 0.7130

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  • AUD / USD found itself under renewed selling pressure on Monday amid a rebound in demand for the dollar.
  • The focus this week is on the FOMC meeting that begins Tuesday.

AUD / USD extended its intraday decline and fell to 0.7126, the lowest level since last Wednesday. The pair could not affirm a recovery, nor return above the 20-day moving average, on the rise from levels below 0.7000. The US dollar found demand again amid “hawkish” expectations from the Federal Reserve.

Investors seem convinced that the Federal Reserve andnt would tighten its monetary policy sooner than previously anticipated given the rise in inflation. On Friday it became known that the Consumer Price Index accelerated to the highest level since 1982.

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Meanwhile, Dollar gains unaffected by pullback in US Treasury yields Even rises in stocks and Wall Street futures are not giving AUD / USD strong support.

That said, investors might prefer to wait on the sidelines before the long-awaited FOMC monetary policy decision, to be announced on Wednesday. As money markets have been pricing in the possibility of an eventual takeoff (interest rate hike) by May 2022, the result should provide a further directional boost to AUD / USD.

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Even from a technical perspective, the two-way price movement witnessed in the last four trading sessions points to indecision about the short-term trajectory of the AUD / USD pair. This makes it prudent to wait for a strong follow-up sell before placing aggressive bear bets amid the absence of market-relevant US economic data.

Technical levels


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