A number of variables conspired to prevent the AUD/USD from profiting from its intraday rally.
The worries surrounding COVID-19 functioned as a headwind for the Australian dollar, keeping the pair in check.
The dollar was bolstered by hawkish Fed predictions, which worked together to limit gains.
The emphasis of the market will be on Federal Reserve Chair Jerome Powell’s congressional hearing.
During the early European session, the AUD/USD pair retested day highs, but quickly lost a few points. The pair has now dropped below the mid-0.7400s, indicating that it is heading towards the bottom end of its daily trading range.
The AUD/USD pair managed to regain some upward traction on Wednesday, aided by a weaker US dollar, after finding some support near 0.7425 the day before. However, a number of reasons prevented traders from making aggressive bets around the major, limiting any real rise, at least for the time being.
Concerns over the increasing coronavirus situation in one of Australia’s most populous cities posed as a stumbling block for the aussie. On Wednesday, authorities in Sydney prolonged a lockdown for at least another 14 days. To prevent a new outbreak of COVID-19, New South Wales state Premier Gladys Berejiklian stated restrictions would need to be in place until at least July 30.
Speculations that the Fed might tighten its monetary policy sooner than expected, on the other hand, continued to strengthen the US dollar. Tuesday’s higher-than-expected US consumer inflation numbers reinforced market forecasts. This also helped to keep the AUD/USD pair from making any significant advances.
Investors are also on the fence ahead of Federal Reserve Chair Jerome Powell’s semi-annual congressional hearing on Wednesday and Thursday. Powell’s comments on the latest inflation statistics are likely to influence expectations about the Fed’s policy outlook, driving the USD and giving the AUD/USD pair a new directional push./n
