- AUD/USD is gaining ground for the second day in a row, though it lacks continuation.
- The positive risk tone weighs on the safe-haven USD and benefits the risk-sensitive AUD.
- The upside remains capped as investors await the US CPI report and FOMC meeting minutes.
The pair AUD/USD rises on Wednesday for the second day in a row and remains above the 0.6650 zone during the first half of the European session. However, the pair lacks any continuation buying or bullish conviction as traders await the release of the latest US consumer inflation figures.
The US CPI, together with the minutes of the Federal Open Market Committee (FOMC), will be crucial to obtain clues about the future rate hike of the Federal Reserve (Fed), which in turn will influence the dollar (USD) and will provide further impetus to the AUD/USD pair. Meanwhile, it is observed a positive risk tone weakening the safe-haven USD and providing some support to the risk-sensitive AUD, amid signs of improving ties with China. It should be remembered that Australia and China – the main trading partners for raw materials – reached an agreement to resolve their dispute over barley imports.
Having said that, the prospects for further tightening of monetary policy by the Fed They offer support to US Treasury yields and limit dollar losses. Apart of this, Worries over deeper global economic recession benefit USD of safe haven and helps cap the AUD/USD pair. In fact, The International Monetary Fund (IMF) cut its global growth outlook for 2023 on Tuesday, citing the impact of rising interest rates. Traders also seem reluctant to open aggressive positions, preferring to wait on the sidelines for key US releases due later in the American session.
From a technical point of view, the recent rejection from the important 200 day simple moving average (SMA) and the subsequent decisive break below the 0.6700 level were considered a new trigger for the bears. This makes it prudent to wait for strong continuation buying before confirming that the last week’s bearish run is over and positioning for any significant short-term bullish move for the AUD/USD pair.
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.
