- AUD/USD started to edge higher after dropping to 0.7724.
- US Dollar Index consolidates daily gains around 91.70.
- Consumer confidence in US improved sharply in February.
The AUD/USD pair dropped to a daily low of 0.7724 in the early trading hours of the American session but started to recover its losses. As of writing, the pair was still down 0.25% on the day at 0.7767. On a weekly basis, the pair remains on track to close higher and snap a two-week losing streak.
The USD seems to have started to lose its strength in the second half of the day despite the fact that the 10-year US Treasury bond yield is rising more than 5%. Week-end flows and profit-taking toward the end of the European session may have played a role in the renewed USD weakness. As of writing, the US Dollar Index was up 0.25% on the day at 91.67.
Earlier in the day, the data from the US showed that the Core Producer Price Index (PPI) in February rose to 2.5%, compared to analysts’ estimate of 2.6%, on a yearly basis from 2% in January.
Additionally, the University of Michigan’s Consumer Sentiment Index in March’s advanced estimate improved sharply to 83 from 76.8 in February. With this reading beating the market expectation of 78.5 by a wide margin and helping the market sentiment improve, the greenback is having a difficult time preserving its strength.
AUD/USD outlook
Previewing the AUD/USD’s possible moves in the next 1-3 weeks, “the current movement is viewed as a consolidation phase and AUD is likely to trade within a 0.7645/0.7820,” said UOB Group strategists. “That said, shorter-term momentum has improved somewhat and AUD could edge above 0.7820 but only a clear break of 0.7860 would indicate that AUD is ready to move higher on a sustained basis.”
Technical levels to watch for
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