- AUD/USD extends its gains on the week, rising as much as 0.78%.
- Rising tensions in the conflict between Russia and Ukraine could not stop the risk-sensitive AUD from rising.
- The Fed’s Kashkari and Harker favor “gradual” 25bp hikes for fear of triggering a recession.
- AUD/USD in the short term is biased to the upside but would face strong resistance in the 0.7210-43 area.
During the American session, the AUD/USD rises, although just below weekly highs amid a risk-off market environment. At time of writing, the AUD/USD is trading at 0.7186.
The failure of the de-escalation in the Russia/Ukraine conflict dampens the mood of the market. Early in the European session, European stocks were trading in the green following Tuesday’s news that Russian troops were pulling back, Russian officials reported. However, the lack of confirmation from Western officials, led by US Secretary of State Blinken, who said on Wednesday that they continue to see critical Russian units moving towards the border and not away, changed sentiment in the US. market participants.
Ukrainian President Zelenskiy confirmed the earlier headline around 17:25 GMT, saying he does not see Russian troops backing down.
Fed’s Kashkary and Harker favor ‘gradual’ interest rate hikes
At around 16:00 GMT, Minnesota Fed President Neil Kaskari said the US central bank could smooth demand by raising rates, but that won’t solve supply-side problems. He favors gradual rate hikes and forecasts 3% inflation by the end of the year, in line with most forecasts. Kashkari sees a recession risk if the Fed hikes too aggressively.
Later that day, Philadelphia Fed President Patrick Harker said he supported a 25 bps increase in the Federal Funds Rate (FFR) at the March meeting. He said that “we need to do what we need to do to curb inflation, but not overreact and possibly slow down an economy that is somehow doing very well.”
Before Wall Street opened, the US economic calendar featured retail sales for January. The headline came in at 3.8% m/m higher than estimates of 2%, while so-called core sales, which exclude gasoline and autos, rose 3.3% m/m, widely exceeding the 0.8% forecast. Additionally, US industrial production rose 1.4% m/m, better than 0.4%, and capacity utilization rose 77.6% from 76.60%, the highest jump in December 2021.
At 19:00 GMT, AUD/USD traders turn their attention to the FOMC Monetary Policy Minutes, followed at 23:30 GMT by the release of the Australian Employment Report, which could provide some clues as to what it will do next. the RBA next. .
AUD/USD Price Forecast: Technical Outlook
On Wednesday, the AUD/USD has risen steadily since the start of the Asian session. Geopolitical headlines caused a bit of a drop, though at press time it is trading at new daily highs, near the 0.7200 figure.
AUD/USD has a neutral but bullish bias in the short term. The first resistance of the AUD/USD would be 0.7200. A break of the latter would expose a three-month downtrend line around 0.7210, followed by the 100-day moving average (DMA) at 0.7243.
Additional technical levels
Source: Fx Street
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