- AUD / USD builds on the previous day’s bounce from levels below 0.7600 amid a sustained sell off around the USD.
- Tuesday’s unimpressive US CPI and falling US bond yields continue to weigh on the USD.
- Positive risk sentiment benefits the higher perceived risk AUD and supports the pair’s upward move.
Downward pressure around the USD has held unabated through the first half of Wednesday’s trading action, pushing the AUD / USD pair to three-week highs near the 0.7700 level.
A combination of supporting factors has helped the pair gain traction for the second day in a row and take advantage of the good bounce of the previous day from levels below 0.7600. The US dollar has extended the previous day’s losses led by rather unimpressive US consumer inflation figures. This, coupled with a positive tone in equity markets, has provided an additional boost to the perceived riskier Aussie.
Data released Tuesday showed that the headline US CPI posted the largest increase since August 2012. This, however, did not provide strong evidence of rising price pressuresRather, it reinforced the Fed’s view that higher inflation will be transitory. Yields on US Treasuries fell sharply after the release, which, in turn, weighed heavily on the US dollar and lifted the AUD / USD pair.
In the meantime, the U.S. Food and Drug Administration (FDA) recommended stopping the launch of Johnson & Johnson’s coronavirus vaccine after six women developed rare blood clots. This could potentially slow the reopening of the US economy and was seen as another factor that further compounded the downward pressure around the USD, allowing the AUD / USD pair to challenge the upper limit of a trading range of various weeks.
Now it will be interesting to see if the bulls can capitalize on the momentum or if the AUD / USD pair finds fresh selling at higher levels amid mild overbought conditions on the hourly charts.
There is no major US economic data release on Wednesday. Therefore, the key focus of attention will be on a speech scheduled by Fed Chairman Jerome Powell, which could influence USD price dynamics and generate some short-term trading opportunities.
AUD / USD technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
