AUD/USD descends to its lowest since April 2020 amid broad-based USD strength


  • AUD/USD dives to its lowest level since April 2020 amid another blowout USD rally.
  • Aggressive Fed rate hike bets, elevated US bond yields continue to boost the buck.
  • The risk-off mood also contributes to driving flows away from the risk-sensitive aussie.

The AUD/USD pair comes under renewed selling pressure on Wednesday and slides below the 0.6400 mark for the first time since April 2020. The pair maintains its offered tone through the early European session and is currently placed around the 0.6370-0.6365 region, down over 1.0% for the day.

A combination of supporting factors lifts the US dollar to a fresh two-decade high, which, in turn, is seen exerting downward pressure on the AUD/USD pair. The overnight hawkish remarks by Fed officials reaffirm the prospects for a more aggressive policy tightening by the Fed and remain supportive of a further rise in the US Treasury bond yields. This, along with the risk-off mood, continues to underpin the safe-haven buck.

In fact, Minneapolis Fed President Neel Kashkari said on Tuesday that policymakers are determined to do what is needed to bring inflation down. Adding to this, Chicago Fed President Charles Evans noted that the US central bank will need to raise interest rates to a range between 4.50% and 4.75%. The yield on the benchmark 10-year US government bond shot to 4% for the first time since April 2010 following the comments.

Investors, meanwhile, remain worried that Fed policy will push the economy into recession. Apart from this, the risk of a further escalation in the Russia-Ukraine conflict continues to take its toll on the global risk sentiment. This is evident from a generally weaker tone around the equity markets, which is driving flows towards the greenback and contributing to the selling bias surrounding the risk-sensitive aussie.

With the latest leg down, the AUD/USD pair confirms this week's bearish breakdown through the lower end of a multi-month-old descending channel. A subsequent fall and acceptance below the 0.6400 mark might have already set the stage for an extension of the downward trajectory. Hence, some follow-through weakness towards testing the next relevant support, around the 0.6300 mark, remains a distinct possibility.

Technical levels to watch

AUD/USD

Overview
Today last price 0.6364
Today Daily Change -0.0071
Today Daily Change % -1.10
Today daily open 0.6435
 
Trends
Daily SMA20 0.6712
Daily SMA50 0.686
Daily SMA100 0.6917
Daily SMA200 0.7087
 
Levels
Previous Daily High 0.6513
Previous Daily Low 0.6414
Previous Weekly High 0.6748
Previous Weekly Low 0.6512
Previous Monthly High 0.7137
Previous Monthly Low 0.6835
Daily Fibonacci 38.2% 0.6452
Daily Fibonacci 61.8% 0.6475
Daily Pivot Point S1 0.6395
Daily Pivot Point S2 0.6355
Daily Pivot Point S3 0.6295
Daily Pivot Point R1 0.6494
Daily Pivot Point R2 0.6553
Daily Pivot Point R3 0.6593

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD treads water just above 1.0400 post-US data

EUR/USD treads water just above 1.0400 post-US data

Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.

EUR/USD News
GBP/USD remains depressed near 1.2520 on stronger Dollar

GBP/USD remains depressed near 1.2520 on stronger Dollar

Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.

GBP/USD News
Gold keeps the bid bias unchanged near $2,700

Gold keeps the bid bias unchanged near $2,700

Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.

Gold News
Geopolitics back on the radar

Geopolitics back on the radar

Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.

Read more
Eurozone PMI sounds the alarm about growth once more

Eurozone PMI sounds the alarm about growth once more

The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures