On Monday, the AUD/USD gained some upward traction thanks to a muted USD price action.
The cautious atmosphere in the market kept any additional rises for the perceived riskier aussie at bay.
Bulls are still looking for a sustained rise past the 0.7600 round-figure level as the AUD/USD pair maintained steady towards the upper end of its daily trading range.
On the first day of a new trading week, the pair saw some dip buying and is now aiming to build on last week’s goodish bounce from six-month lows. Fears of out-of-control inflation in the United States were alleviated, putting the US dollar bulls on the defensive. This, in turn, was considered as a crucial factor in the AUD/USD pair gaining some support.
In fact, the US core PCE Price Index, which excludes the volatile food and energy components, increased by 3.4 percent year over year in May. This was the highest advance since April 1992, but it fell short of market expectations, reinforcing the Fed’s narrative that any increase in inflation will be temporary.
This follows Fed Chair Jerome Powell’s remarks last week, in which he stated that inflation is rising due to pent-up demand and supply bottlenecks, and that the pricing pressures should subside on their own. This acted as a headwind for the greenback on Monday, allowing the AUD/USD pair to gain some ground.
Traders were hesitant to place aggressive wagers on the considered riskier aussie due to a cautious atmosphere in the equities markets. In the absence of important market-moving economic reports, it is recommended to wait for some substantial follow-through purchasing before positioning for any further gains around the AUD/USD pair.
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