AUD / USD with modest losses around 0.7500, lacks continuation

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  • AUD / USD is moving lower for the second day in a row Monday amid modest USD strength.
  • It is still supported before key central bank events: the RBA and FOMC meetings.

The pair AUD/USD it has quickly recovered a few pips from the lows of the European session and is moving with modest intraday losses around the key psychological level of 0.7500.

The pair has extended its retracement slide on Friday from the 0.7555-60 region, or the highest level since early July, and has seen some continuation selling on the first day of a new week. This marks the second consecutive day of negative movement for the AUD / USD pair and is due to a modest strength of the US dollar.

The USD remained well supported by expectations that the Fed would be forced to adopt a more aggressive policy response. to contain stubbornly high inflation. The speculation was fueled by Friday’s core US PCE price index, the Fed’s preferred gauge of inflation, which was flat near 30-year highs in September.

Meanwhile, fears of a faster-than-expected rise in inflation, coupled with signs of a global economic slowdown, have sparked stagflation risk concerns. This further benefited the safe-haven US dollar. Secondly, a generally positive tone around equity markets helped limit losses for the perceived riskier Aussie.

Apart from this, the increase in expectations for an interest rate hike by the Reserve Bank of Australia (RBA) extended some support to the AUD / USD pair. Therefore, the market’s focus will remain on this week’s key central bank events. The RBA will deliver its policy update on Tuesday, while the Fed is scheduled to announce its decisions on Wednesday..

In the meantime, investors may prefer to wait on the sidelines and refrain from opening aggressive positions, which should lead to a subdued and limited spread of price action within a range. That said, the release of the US ISM Manufacturing PMI on Monday could influence the USD and provide some short-term momentum at the start of the US session.

AUD / USD technical levels

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