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  • AUD/USD continues its retreat from the two-week high and loses its rebound from the intraday low.
  • The US 10-year Treasury yield remains near a three-year high, while Australian bond coupons rose to their highest level since 2018.
  • The sentiment is being pressured downward by the Ukraine-Russia crisis and the Fed’s dovish stance.
  • Fed policymakers said risk catalysts will be crucial to monitor the new momentum.

The AUD/USD forecast turns neutral to bullish as the pair fails to surpass the 0.7400 mark and slowly retreats towards 0.7350-60.

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Positive sentiment and rising yields support the greenback as AUD/USD sellers attack daily lows near 0.7380. On the other hand, the risk barometer pair declines from a two-week high.

Soaring treasury yields

As of May 2019, the bid price is nearing 2.328%, a new high for the 10-year Treasury yield. The coupon rates on Australian 10-year bonds have also risen significantly since November 2018.

Fed’s hawkishness

A hawkish Fed policymaker’s remarks led to multi-day high bond coupons. In an indirect indication of a speeding up of interest rate hikes, Atlanta Fed Presidents Bostic and Richmond Barkin touted the Federal Reserve’s ability to control inflation on Tuesday. However, Fed chair Jerome Powell’s comments that “the Fed will raise rates by more than 25 basis points if necessary” provided significant impetus for Treasury coupons.

Changnyeong Rhee, Asia-Pacific Director of the International Monetary Fund (IMF), commented at the bond sale, saying, “The US has leeway to raise interest rates.” Interest rates will peak in the second quarter of this year.

Russia-Ukraine saga

Furthermore, the worsening conditions of the Ukraine-Russia crisis, after Kyiv rejected Moscow’s request for Mariupol’s surrender, are putting pressure on market sentiment and AUD/USD exchange rates. According to Volodymyr Zelenskyy, President of Ukraine, decision-making about occupied Ukrainian territory cannot be made immediately on Interfax. Moreover, US President Joe Biden mentioned concerns over a cyberattack on the United States.

AUD/USD forecast via daily open interest

aud/usd forecast

The daily close price of the AUD/USD pair was lower than that of the previous day. Meanwhile, the open interest slightly increased which shows bearish behavior.

What’s next for AUD/USD forecast?

AUD/USD traders should pay attention to risk catalysts and the Fed’s speech moving forward.

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AUD/USD price technical forecast: Bulls losing steam

aud/usd forecast

The AUD/USD price is wobbling with the 20-period SMA on the 4-hour chart. The pair has been consolidating around the 0.7400 area for three trading days. Although the outlook is shaky, the Aussie may find strong support at 0.7350-60.

The volume data shows some clues of bearishness. Hence, we may see some downside correction around 0.7350 ahead of 0.7300.

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