- AUD/USD attracted some dip-buying on Wednesday and bounced over 35 pips from the daily low.
- Easing Omicron fears extended support to the perceived riskier aussie and provided a modest lift.
- The Fed’s hawkish outlook acted as a tailwind for the USD and capped any further gains for the pair.
The AUD/USD pair climbed back above mid-0.7100s during the first half of the European session and refreshed the weekly high in the last hour.
The pair attracted some dip-buying near the 0.7120 region on Wednesday and is now looking to build on this week's bounce from the 0.7080 area or the lowest level since December 7. Reports that the current vaccines may be more effective than first thought in fighting the Omicron variant boosted investors' confidence. This, in turn, was seen as a key factor that extended some support to the perceived riskier aussie.
Apart from this, a fresh leg down in the US Treasury bond yields undermined the safe-haven US dollar and contributed to the AUD/USD pair's goodish intraday bounce of around 35 pips. That said, the Fed's hawkish outlook acted as a tailwind for the greenback and capped gains for the major. It is worth recalling that the so-called dot plot indicated that Fed officials expect to raise the fed funds rate at least three times next year.
Investors also seemed reluctant to place aggressive bets amid relatively thin liquidity conditions heading into the end-of-year holiday season. This, in turn, warrants some caution for bullish traders and before positioning for any further gains. Market participants now look forward to the US economic docket, highlighting the release of the final Q3 GDP print and the Conference Board's Consumer Confidence Index for a fresh impetus.
Apart from this, the US bond yields will influence the USD price dynamics. Traders will further take cues from developments surrounding the coronavirus saga and the broader market risk sentiment to grab some short-term opportunities around the AUD/USD pair.
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
AUD/USD remains vulnerable near 26-month low amid bullish USD
AUD/USD holds steady above the 0.6200 mark on Friday, though it remains close to its lowest level since October 2022 touched the previous day. The USD hovers near a two-year top on the back of the Fed's hawkish signal and a weaker risk tone. Furthermore, the RBA's dovish shift, concerns about China's economic recovery and trade war fears undermine the Aussie.
USD/JPY advances to a five-week high, around 158.00 neighborhood
USD/JPY hit a five-month top on Friday in the wake of the Fed's hawkish outlook and the BoJ's decision to keep interest rates steady. Bulls largely shrugged off data showing that Japan's National CPI rose in November, which bodes well for an additional interest rate hike by the BoJ.
Gold price oscillates in a range below $2,600 amid mixed cues
Gold price consolidates below the $2,600 mark following the previous day's good two-way price move and remains close to over a one-month low. The Fed signaled a cautious path of policy easing next year, which remains supportive of elevated US bond yields and assists the USD in standing firm near a two-year high.
Bitcoin's trajectory shows similarities with previous cycles as long-term holders book profits of $2.1 billion
Glassnode's Week on Chain report revealed the similarities between the current Bitcoin uptrend and previous cycles amid changing market conditions. Meanwhile, long-term investors began distributing their tokens at the $100K level, culminating in a new all-time high of $2.1 billion in realized profits.
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.