- AUD/USD rebounds from a fresh YTD low touched on Wednesday amid a modest USD slide.
- China’s economic woes might cap gains for the Aussie ahead of the FOMC meeting minutes.
- Any subsequent move up is more likely to confront a stiff barrier near the 0.6520 confluence.
The AUD/USD pair stages a goodish intraday recovery from the 0.6430-0.6425 region, or its lowest level since November 2022 touched this Wednesday and builds on the momentum through the early part of the European session. Spot prices climb to a fresh daily top, around the 0.6480 region in the last hour and for now, seem to have snapped a six-day losing streak.
Retreating US Treasury bond yields, along with a positive tone around the US equity futures, exerts downward pressure on the safe-haven US Dollar (USD) and prompts some short-covering around the AUD/USD pair. That said, growing concerns about the worsening economic conditions in China might cap gains for the China-proxy Aussie. Traders might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of the FOMC meeting minutes, due for release later during the US session.
From a technical perspective, the momentum lifts the AUD/USD pair beyond the 23.6% Fibonacci retracement level of the recent downfall witnessed over the past week or so. Moreover, oscillators on the 1-hour chart have just started gaining positive traction and support prospects for further intraday appreciating move. Hence, a subsequent strength towards a confluence hurdle near the 0.6500 psychological mark, comprising the 100-hour Simple Moving Average (SMA) and the 38.2% Fibo., looks like a distinct possibility.
That said, technical indicators on the daily chart are holding deep in the bearish territory and suggest that the recovery move could run out of steam near the weekly peak, around the 0.6520 area, set on Tuesday. The said area marks another confluence, comprising the 200-hour SMA and the 50% Fibo. level, which should now act as a key pivotal point. A sustained strength beyond might suggests that the AUD/USD pair has bottomed and shift the bias in favour of bulls, paving the way for some meaningful recovery.
On the flip side, the YTD low, around the 0.6430-0.6425 region, now seems to protect the immediate downside ahead of the 0.6400 round-figure mark. Some follow-through selling will be seen as a fresh trigger for bearish traders and set the stage for the resumption of the recent downward trajectory witnessed over the past month or so, from the 0.6900 double-top resistance. The AUD/USD pair might then weaken further towards the 0.6360 intermediate support en route to the 0.63000 mark and the 0.6265 zone.
AUD/USD 1-hour chart
Technical levels to watch
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
Editors’ Picks
EUR/USD trades sideways below 1.0450 amid quiet markets
EUR/USD defends gains below 1.0450 in European trading on Monday. Thin trading heading into the Xmas holiday and a modest US Dollar rebound leaves the pair in a familair range. Meanwhile, ECB President Lagarde's comments fail to impress the Euro.
GBP/USD stays defensive below 1.2600 after UK Q3 GDP revision
GBP/USD trades on the defensive below 1.2600 in the European session on Monday. The pair holds lower ground following the downward revision to the third-quarter UK GDP data, which weighs negatively on the Pound Sterling amid a broad US Dollar uptick.
Gold price holds comfortably above $2,600 mark; lacks bullish conviction
Gold price oscillates in a range at the start of a new week amid mixed fundamental cues. Geopolitical risks continue to underpin the XAU/USD amid subdued US Dollar price action. The Fed’s hawkish stance backs elevated US bond yields and caps the pair’s gains.
The US Dollar ends the year on a strong note
The US Dollar ends the year on a strong note, hitting two-year highs at 108.45. The Fed expects a 50-point rate cut for the full year 2025 versus 4 cuts one quarter earlier, citing higher inflation forecasts and a stubbornly strong labour market.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.