AUD/USD retreats from 5-month highs as US Treasury yields rise

• AUD/USD retreats from five-month highs recently reached at 0.6735, amid a rebound in US Treasury yields.
• Regional Federal Reserve officials have opposed expectations of rate cuts.
• Traders are awaiting the minutes of the latest meeting of the Reserve Bank of Australia (RBA).

The AUD/USD pair retreats from five-month highs reached at 0.6735 and falls below the 0.6700 zone, thanks to a rally in US Treasury yields, which is reflected in the US Dollar trimming some of its their previous losses. At the time of writing, the pair is trading at 0.6694, with a minimum decline of 0.07%.

AUD/USD remains on the defensive due to firm US Dollar

Risk appetite momentum failed to support the AUD/USD pair on Monday. A sudden rise in US Treasury yields, sponsored by US Federal Reserve officials who opposed Chairman Jerome Powell’s words last Wednesday, prevented the Dollar from extending its losses.

The Fed parade began with New York Fed President John William saying they have not discussed rate cuts. Instead, the discussion is whether the Fed is restrictive enough or has room to raise rates. As most officials have said, that will depend on upcoming data.

For his part, the president of the Atlanta Fed, Raphael Bostic, stated that they must remain firm in the fight against inflation despite foreseeing two rate cuts and a soft landing next year. Recently, Chicago Fed President Austan Goolsbee stated that he sees inflation improving and added that the Fed would not want to recommit to what they will do at future meetings.

The Australian economy remains resilient after releasing strong employment figures and preliminary PMI reports. However, traders are awaiting the release of minutes from the latest Reserve Bank of Australia (RBA) meeting on Tuesday, along with housing data on Wednesday. AUD/USD is also watching Chinese data as the People’s Bank of China (PBoC) is scheduled to announce its interest rate decision.

AUD/USD Price Analysis

The AUD/USD daily chart shows the pair with a bullish bias and despite having retreated below the 0.6700 area, the bullish trend remains intact. It must be said that once buyers reclaimed an 11-month-old resistance trend line, it suggests that buyers are in control, and could lift the pair higher. If they reclaim the 0.6700 level, the next resistance would be the July 27 high at 0.6821, followed by the July 14 high at 0.6894. On the other hand, a daily close below 0.6700 would pave the way to retest the support around 0.6650, followed by the 200-day moving average at 0.6576.