- AUD/USD remains on the back foot at the start of the week.
- US Dollar Index edges higher toward 92.50 on Monday.
- The cautious market mood is helping the USD find demand.
The AUD/USD pair closed the previous week in the negative territory and started to edge lower after fluctuating in a tight range during the Asian trading hours on Monday. As of writing, the pair was trading at a daily low of 0.7450, losing 0.45% on the day.
In the absence of high-tier macroeconomic data releases and fundamental developments, the cautious market mood at the start of the week is helping the greenback find demand. Reflecting the broad-based USD strength, the US Dollar Index is rising 0.27% at 92.35.
Meanwhile, the Dow Futures and the S&P Futures are down 0.5% and 0.3%, respectively, suggesting that the risk-averse market environment is likely to remain intact in the American session and allow the USD to continue to outperform its rivals.
On Tuesday, the HIS New Home Sales and the National Bank of Australia Bank’s Business Confidence and Business Conditions data for June will be featured in the Australian economic docket. Later in the day, June Consumer Price Index (CPI) data from the US will be looked upon for fresh impetus.
UOB Group FX strategists think that AUD/USD could have a difficult time breaking below 0.7400 in the near term.
“While our strong resistance level at 0.7500 is still intact, downward momentum has waned considerably and the prospect for AUD to break 0.7400 has diminished,” strategists noted. “In order to rejuvenate the flagging downward momentum, AUD has to move and stay below 0.7450 within these 1 to 2 days or a break of 0.7500 would not be surprising.”
