- AUDUSD remains under some selling pressure for the second day in a row on Thursday.
- A less aggressive RBA weighs on the Aussie amid the appearance of some buying in the USD.
- Investors now await the US CPI report before opening new directional positions.
The pair AUDUSD it extends this week’s retracement from 0.6550, or its highest level since September 23, and remains under some selling pressure for the second day in a row on Thursday. The pair has reached a new weekly low during the first half of the European session and bears are now expecting sustained weakness below the 0.6400 round level.
The Australian dollar is hurt by the fact that the Reserve Bank of Australia (RBA) has already reduced its rate hike regime to 25 basis points. Furthermore, RBA Deputy Governor Michele Bullock noted on Wednesday that there are good reasons to think that we are approaching the peak of inflation. This, in turn, suggests that the Australian central bank could further slow down the pace of its policy tightening, which in turn continues to weigh on AUDUSD.
Secondly, US dollar attracts some buying and looking to build on the previous day’s nice bounce from a multi-week low. This is seen as another factor putting some downward pressure on the AUDUSD pair. That said, the pullback in US Treasury yields, coupled with a generally positive risk tone could cap the safe-haven USD and offer some support to the AUDrisk sensitive. Furthermore, traders would prefer to wait for US consumer inflation numbers.
US headline CPI expected to decline at 8% yoy rate in October, compared to last month’s reading of 8.2%. An upside surprise would reignite expectations for a faster rate hike by the Fed and would boost the US currency, paving the way for a further short-term depreciation move in the AUDUSD pair. Therefore, any rally attempt could be seen as a selling opportunity and risks fading quickly.
AUDUSD technical levels
Source: Fx Street
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