AUDUSD attracts buyers for the second day in a row despite muted US Dollar price activity.
The AUDUSD pair gains upward traction for the second day in a row on Thursday, climbing again closer to the 0.6600 level during the early portion of the European session. Bulls are now trying to extend on momentum beyond a theoretically key 200-day Simple Moving Average (SMA) and the recent recovery from the 0.6480-0.6475 region, or a multi-week low hit on Tuesday amid sluggish US
Dollar (USD) demand.
Bets that the Fed will begin reducing interest rates in June put USD bulls on the defensive.
The USD Index (DXY), which tracks the US dollar against a basket of currencies, is nearing its lowest level since early February due to uncertainty over the Federal Reserve’s (Fed) rate-cutting plan. In reality, Fed Chair Jerome Powell stated in his semi-annual congressional hearing on Wednesday that the central bank will lower interest rates this year if there is more indication that inflation is falling to the 2% objective. Minneapolis Fed President Neel Kashkari, on the other hand, dampened expectations for more dramatic policy easing, saying he may limit the number of cuts in 2024 to just one in light of the incoming stronger macro indicators.
Meanwhile, contradictory signs restrict the downside for US Treasury bond yields, This, combined with a generally negative tone in the equities markets, might provide as a tailwind for the safe-haven greenback.
The positive Chinese Trade Balance also provides support, albeit a lower risk tone may limit gains.
China’s greater export and import growth in January-February helps to counter the negative aspect and supports the probability of the AUDUSD pair gaining further in the medium term. Traders are now looking to Fed Chair Powell’s second day of testimony, which, combined with the US Weekly Initial Jobless Claims and Trade Balance data, will move the USD, but the emphasis remains fixed to the US NFP report on Friday.
