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  • AUD/USD staged a solid bounce from two-month lows and snapped four days of the losing streak.
  • Sliding US bond yields, a turnaround in the global risk sentiment prompted some USD profit-taking.
  • The Fed’s hawkish shift should limit the USD slide and keep a lid on any further gains for the major.

The AUD/USD pair held on to its modest intraday gains through the first half of the European session and was last seen trading daily tops, around the 0.7510-15 region.

The pair gained some positive traction on the first day of a new trading week and has now recovered a part of the previous session’s heavy losses to the lowest level since December 2020. The uptick allowed the AUD/USD pair to snap four consecutive days of the losing streak and was sponsored by a modest US dollar pullback.

As investors digested a sudden hawkish turn by the Fed, a softer tone around the US Treasury bond yields prompted some profit-taking around the USD. Apart from this, a turnaround in the global risk sentiment further undermined the greenback’s relative safe-haven status and extended some support to the perceived riskier aussie.

Despite the supporting factors, any meaningful recovery seems elusive in the wake of the Fed’s signal that it might raise interest rates at a much faster pace than anticipated previously. It is worth recalling that the Fed last week stunned investors and brought forward its timetable for the first post-pandemic interest rate hikes.

This should continue to act as a tailwind for the buck and cap gains for the AUD/USD pair. The negative outlook is reinforced by Friday’s decisive break below the very important 200-day SMA for the first time since June 2020. Hence, any subsequent positive move might still be seen as an opportunity to initiate fresh bearish positions.

There isn’t any major market-moving economic data due for release from the US, leaving the AUD/USD pair at the mercy of the USD price dynamics. Apart from this, the broader market risk sentiment might further contribute to provide some short-term trading impetus on the first day of a new week.

Technical levels to watch