The Latest on AUD/USD: A Detailed Analysis by Top Investment Manager
AUD/USD Retreats from Two-Week High
- The AUD/USD pair experienced intraday selling near mid-0.6500s after reaching a two-week high earlier on Monday.
- Bets on slower Fed rate cuts are supporting the USD, putting pressure on the pair.
- The risk-on sentiment and the RBA’s hawkish stance have not boosted the AUD bulls.
Investors are closely monitoring the impact of Scott Bessent’s nomination as US Treasury Secretary, with expectations of a less dovish Federal Reserve influencing market sentiment. The belief that President-elect Donald Trump’s economic policies will drive inflation and lead to gradual interest rate cuts by the Fed is limiting the USD’s decline and creating downward pressure on the currency pair.
Factors Influencing Market Sentiment
- Reports of a ceasefire deal between Israel and Hezbollah.
- Expectations of a phased approach to tariffs by Bessent to reduce the budget deficit.
- RBA’s hawkish stance and post-US election risk-on rally.
Despite these factors, the AUD/USD pair is facing downside pressure, indicating that the recent bounce from a multi-month low may have stalled. However, aggressive bets from USD bulls are unlikely due to a decline in US Treasury bond yields caused by Bessent’s fiscal policy views.
Future Market Outlook
- Upcoming releases of FOMC meeting minutes, US GDP data, and PCE Price Index.
- Australian consumer inflation figures to be released on Wednesday.
- Comments from Fed officials to provide cues on future rate-cut path.
Technical Outlook for AUD/USD
If the AUD/USD pair breaks below the 0.6500 mark, it could target the 0.6440 area, followed by 0.6400 and potentially the August monthly swing low around 0.6350-0.6345. On the upside, breaching the mid-0.6500s could lead to a rally towards the 0.6600 mark and the 200-day SMA near 0.6625-0.6630. Further momentum could push prices to the 0.6675 confluence before aiming for 0.6700.
Daily Chart Analysis
