Economy Forex

AUD/USD rises again above 0.7350 at the European session.

  • AUD/USD regains positive traction on Thursday amid fresh selling around the USD.
  • Risk appetite weighs on safe haven USD and benefits higher perceived risk AUD.
  • Fed’s optimistic tilt could act as a tailwind for USD and limit the pair’s upside.

The intraday selling bias around the USD has pushed the AUD/USD pair to fresh daily highs in the 0.7260 region at the start of the European session on Thursday.

Following the previous day’s post-FOMC pullback from the 0.7300 region, the AUD/USD pair has regained fresh buying near the 0.7220 support area on Thursday. The emergence of some selling around the US dollar has resulted in the second consecutive day of positive movement.

AUD/USD

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A bullish tilt amid prevailing risk appetite has resulted in the DXY dollar index pulling back from one-month highs touched the previous day. Evergrande Group has agreed to settle interest payments on an internal bond, which has elevated global risk sentiment.

This, in turn, has contributed to the perceived riskier Australian dollar, though any significant move higher still seems unlikely. A moderation in the pace of asset purchases may soon be warranted if economic growth continues broadly as expected, according to the U.S. central bank.

In addition, Fed Chairman Jerome Powell said that asset purchases during the pandemic may end altogether by mid-2022. Additionally, the dot plot showed a growing tendency to raise interest rates in 2022, which should continue to boost the USD.

Even from a technical perspective, the recent decline over the past three weeks has occurred in a bearish channel. As a result, we see a well-established near-term downtrend and further losses are likely, so aggressive bulls should act with caution.

US economic calendar now awaits the release of weekly jobless claims and preliminary PMIs for September. Combined with broader market risk sentiment, the USD could be weighed down, which will help to generate some momentum for the AUD/USD pair.

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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