- AUD/USD is again facing rejection near the 100-day SMA amid resurgent USD demand.
- Prospects of an imminent pause in the Fed’s rate hike cycle limit dollar gains.
- Softer than expected US PPI fails to impress USD bulls or provide fresh momentum.
The AUD/USD pair continues its struggle to find acceptance above the 100-day SMA and attracts aggressive sellers in the 0.6800 area on Thursday. The pair maintains its strong offer tone during the early North American session and is currently hovering around the 0.6745 area, just a few pips above today’s weekly low.
As investors look beyond Wednesday’s US CPI release, a generally weaker risk tone pushes the safe-haven dollar (USD) to more than a one-week high and turns out to be a key factor which puts downward pressure on the AUD/USD pair. Against the backdrop of concerns about the US debt ceiling, mixed Chinese inflation data released on Thursday fueled concerns about the economic outlook for the second quarter and tempered investor appetite for riskier assets. This, in turn, drives some safe-haven flows into the dollar and weakens the risk-sensitive Aussie.
However, bullish prospects for the dollar remain limited amid growing acceptance that the Federal Reserve (Fed) is nearing the end of its year-long rate hike cycle. Bets were bolstered by the softer-than-expected release of the US Producer Price Index (PPI) on Thursday, which keeps US Treasury yields depressed and caps the USD . Besides
the Reserve Bank of Australia’s (RBA) hawkish outlook, which indicates further monetary policy tightening may be needed to ensure inflation returns to target, and caps AUD/USD losses.
Spot prices recover quickly near 0.6750, though recent repeated failures to ride momentum beyond a technically significant moving average warrant some caution for bullish traders. The aforementioned supportive fundamental background suggests that the path of least resistance for the AUD/USD pair is to the upside. Therefore, any further decline could still be seen as a buying opportunity and is more likely to remain limited.
Technical levels to watch
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.
