AUDUSD re-tests its annual low as traders flock to the US Dollar amid market uncertainty.
As the European session begins on Thursday. The AUDUSD is taking offers to repeat the lowest levels in six months around 0.6520. As a result, the Aussie pair validates the market’s demand for the US Dollar. Despite uncertainty around the US debt ceiling extension and Fed worries.
The RBA-Fed gap has regained prominence following the RBNZ’s dovish increase.
Following the Reserve Bank of New Zealand’s (RBNZ) dovish hike. Market participants expect the Reserve Bank of Australia (RBA) to follow suit and amplify the RBA vs Fed divergence. This week’s edition includes the same. The FOMC Minutes and Fed discussions will have an impact on the Australian Dollar (AUD).
According to the minutes of the most recent Federal Open Market Committee (FOMC) meeting. Policymakers are divided on the US central bank’s latest 0.25% rate rise. The market also doubts a similar move in June, especially if Atlanta Fed President Raphael Bostic and Federal Reserve Governor Christopher Waller stir the Fed’s hawkish worries.
Elsewhere, US policymakers’ inability to deliver a debt limit extension deal, as well as the impending long weekend for House Representatives, contrasts with negotiators’ belief that progress has been made in the most recent rounds of discussions. Nonetheless, global rating agencies such as Fitch and Moody’s have become wary of the US credit rating position, while the The US Treasury Department acknowledged their concerns.
Against this backdrop, US stock futures are licking their wounds, while US Treasury bond rates are at their highest levels since mid-March.
Looking forward, the US weekly jobless claims, the Chicago Fed National Activity Index, and pending home sales will adorn the calendar, but the debt limit talks will be critical to monitor for clear direction.
Technical examination
Bears are encouraged by the AUDUSD pair’s prolonged downward breach of an 11-week-old support-turned-resistance and the 61.8%. Fibonacci retracement of the quote’s October 2022 to February 2023 gain, both between 0.6620 and 0.6550. However, the 61.8% Fibonacci Extension (FE) of the pair’s February-May movements, at 0.6445, entices sellers.
