AUD/USD Price Analysis: Dollar Edges Higher Above 5-Week Lows

• The dollar was locked near a five-week low.

• Concerns about market-rattling volatility across international banks subsided.

• There is a 73.8% chance of a 25bps Fed hike.

Today’s AUD/USD price analysis is slightly bearish. While making some gains on Tuesday, the dollar was locked near a five-week low. Investors cautiously retreated into riskier assets following UBS’ state-backed acquisition of Credit Suisse. The acquisition eased some concerns about a global banking crisis.

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However, uncertainty over the scope of the effects of a banking crisis that started with Silicon Valley Bank’s failure kept market sentiment fragile. It capped risk appetite and supported the safe-haven dollar to some extent.

On Monday, as concerns about market-rattling volatility across international banks subsided, a brief risk-on surge followed news of UBS’ proposed takeover of competitor Credit Suisse. This was a shotgun merger arranged by Swiss authorities on Sunday.

The Federal Reserve announced on Sunday that it would conduct daily currency swaps in collaboration with other central banks. This ensures that banks in Canada, Britain, Japan, Switzerland, and the Eurozone have access to the dollars they need to function.

At the same time, the dollar was under pressure due to lower US rate expectations ahead of the Federal Reserve’s two-day policy meeting.

Markets are pricing in a 26.2% likelihood that the Fed will hold steady when it delivers its monetary policy decision on Wednesday. There is a 73.8% chance of a 25bps hike, according to the CME FedWatch tool.

AUD/USD key events today

Investors are awaiting an existing home sales report from the US that will show the state of the housing market.

AUD/USD technical price analysis: Bears go for the 30-SMA support

The 4-hour chart shows AUD/USD in a bearish move near the 30-SMA support. The RSI is also facing the pivotal 50-level. It is clear that bears are challenging the SMA support and are looking to reverse the trend.

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The price has failed to trade above the 0.6702 key level as it has pushed back below it every time bulls tried to break above. A break below the 30-SMA would indicate a shift in sentiment and likely lead to a drop in the price to the 0.6606 support.

However, if the SMA holds, the price will take out the 0.6702 level and head for the 0.6775 resistance.

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