AUD / USD struggles around 0.7250

• Risk sensitive currencies are lower in the North American session.
• Goldman Sachs expects four raises from the Fed in 2022, according to Reuters.
• AUD / USD is biased lower, descending from a trend line of support turned resistance.

The AUD it plummets as the American session begins, amid risk aversion, as evidenced by US equity futures indices pointing to a lower open. Meanwhile, AUD / USD is trading at 0.7154 at time of writing.

In the middle of the European session, a report said that Goldman Sachs, the North American investment bank, expects four hikes to the federal funds rate. In addition, the bank noted that the US central bank would begin to reduce its balance sheet by July 2022.

This comes as the latest Federal Reserve Minutes said the central bank is ready to raise rates and would also begin quantitative tightening (QT), as it struggles to drag inflation down from about 7%. According to the Minutes, the balance sheet reduction would likely go into effect alongside the Fed’s first rate hike.

Meanwhile, the mood of the market benefits its safe-haven peers, such as the US dollar. The US Dollar Index, which tracks USD value against its peers, is up 0.45% firmly at 96.15.

In the bond market, the 10-year US Treasury yield, one of the barometers of inflation, stands at 1,806%, a tailwind for the USD, to the detriment of the risk-sensitive AUD.

The US economic agenda presented the monthly wholesale inventories for November, with an increase of around 1.4%, higher than the estimated 1.2% but below the October reading of 2.5%.

AUD / USD Price Forecast: Technical Outlook

AUD / USD is skewed to the downside. Daily Moving Averages (DMAs) reside above price, with the 50 DMA sloping downward. Additionally, AUD / USD broke below an uptrend line drawn at December 2021 lows in the last two trading days.

In the overnight session, the daily high of AUD / USD was based around 0.7200, testing the aforementioned trend line to pull back towards the 0.7150 price level.

On the downside, the first AUD / USD support would be the Jan 7 daily low at 0.7130. A break of the latter would expose the low of December 20, 2021, at 0.7082, followed by the low of December 3, 2021 at 0.6993.