The AUD/USD pair is facing selling pressure after a brief uptick to the mid-0.6500s, reaching a fresh daily low in the early European session on Thursday. Currently trading around 0.6515, the pair has paused its rebound from early May’s lows.
The resurgence of the US Dollar from a three-week low following the FOMC policy decision is a key factor driving the AUD/USD pair lower. Additionally, concerns about China’s economic slowdown, along with mixed Australian consumer inflation data, are weighing on the Australian Dollar.
Recent data showing a contraction in China’s manufacturing sector and uncertainty about further RBA rate hikes are contributing to the downward pressure on the Aussie. Meanwhile, the Fed’s acknowledgment of inflation progress and potential rate cuts are keeping US Treasury yields low, which could limit further gains for the USD.
Despite these factors, a positive risk sentiment in the market may offer some support to the Aussie and help prevent significant losses for the AUD/USD pair. Traders are advised to await the release of the Nonfarm Payrolls report on Friday before making any major moves.
Analysis:
The AUD/USD pair is facing downward pressure due to a strong USD demand, economic concerns in China, and uncertainty about RBA rate hikes. While a positive market sentiment may provide some support, traders should remain cautious ahead of key economic reports. Overall, the current market conditions suggest a cautious approach to trading the AUD/USD pair.