In the face of a USD downturn, the AUD/USD consolidates its recovery over 0.7450.
The Australian covid fears continue to weigh on the aussie.
The focus is still on Fed Chair Powell’s testimony for new guidance.
The AUD/USD pair took off after finding strong bids above 0.7435, and is now stabilizing above 0.7450 despite a cautious market mood.
Hotter-than-expected US inflation figures startled markets on Tuesday, sending global stocks lower and boosting the greenback. Following the release of the US CPI, the spot plummeted as low as 0.7427.
Risk sentiment is still negative ahead of Fed Chair Jerome Powell’s speech on Wednesday, as markets expect Powell to hint at monetary policy relaxation in light of the recent inflation spike.
The risk-sensitive aussie’s rally appears to be in jeopardy, despite the recent reversal in the greenback providing some relief to AUD bulls. The currency pair’s current rise can also be connected to the rise in gold prices, which strengthens the resource-linked aussie.
The aussie will be influenced by the dollar’s price behavior and Treasury rates dynamics in the coming day. Meanwhile, investors are concerned about the Delta covid variant’s rapid growth in Australia, where seven new cases have been confirmed in Melbourne and Sydney is battling extremely contagious outbreaks.
In the short term, the AUD/USD pair is set to continue its downward trend. As technical indicators travel south within negative levels, the 4-hour chart shows that it is currently developing below all of its moving averages. Last week, the pair hit a yearly bottom of 0.7409, with a break below that level indicating a further drop below the 0.7250/60 price zone. Levels of support: 0.7410, 0.7370, and 0.7320. According to Valeria Bednarik, FXStreet’s Chief Analyst, resistance levels are 0.7490, 0.7530, and 0.7570./n
