Aussie: Under 0.6250, new demand for the AUD/USD is seen as a risk-on profile and US inflation talk develop.

Oct 12, 2022
VOT Research Desk

Market Insights & Analysis

After detecting a respectable amount of purchasing activity at roughly 0.6240, the AUD/USD pair has resolutely preserved its negative bias.

As the risk-on urge has begun to take hold, the asset has increased its gains to over 0.6280. Investors are supporting the risk-perceived currencies and ignoring the Federal Reserve’s (Fed) hawkish pessimism.

During the Asian session on Wednesday, the AUD/USD pair makes a new cyclical low and appears vulnerable to continuing its downward trend. Despite the Reserve Bank of Australia’s decision last week to slow the pace of policy tightening, the Australian dollar continues to perform poorly.

In addition, the China-proxy Australian could be further impacted by the dim outlook for the Chinese economy as a result of a rise in local COVID-19 cases and trade tensions between the US and China. In addition, the underlying strong bullish tone of the US dollar supports prospects for a further near-term depreciating move for the major. These prospects are supported by growing concerns about a deeper global economic downturn.

boosting expectations that the Federal Reserve will continue its aggressive rate-hiking cycle to control inflation and that the risk-off environment will continue to support the safe-haven dollar. The recent hawkish remarks made by a number of Fed officials and increased bets on a massive 75 bps Fed rate hike in November prompted Friday’s robust US jobs report.

This still favors USD bulls and supports higher yields on US Treasury bonds. Meanwhile, investors’ appetite for perceived riskier assets has been tempered by worries about economic headwinds caused by rapidly rising borrowing costs and a further escalation of the Russia-Ukraine conflict.

The AUD/USD pair is trading around 0.6300 at the Asian opening, as the US dollar lost steam in the middle of the afternoon. As technical indicators continue to move in the direction of oversold readings, the daily chart indicates that there is a possibility of another leg south. Additionally, the 20 SMA is accelerating the pair’s decline above the current level, which is approximately 0.6550. The pair is significantly below all of its moving averages.

Additionally, the 4-hour chart demonstrates that bears control the pair. In light of ongoing interest in selling, the 20 SMA continues to fall below the longer ones but continues to rise above the current price. Technical indicators have also reached oversold levels at the same time, barely recovering and not suggesting a recovery.

Niveaux of support: 0.6270, 0.6230, and 0.61900.6340 0.6380 0.6425

AUD/USD