AUD/USD shows high volatility
AUD/USD shows high volatility
On Tuesday, the AUD/USD pair traded in the red as investor sentiment towards risky assets declined.
Despite the fact that the pair opened the Asian session with a gain, it was unable to hold the level it reached and dropped to the 0.6650 level. However, the Australian dollar is still trying to recover to the 0.6670 level against the US dollar.
It should be noted that the weakness of the Australian dollar is primarily due to the RBA's decision not to consider raising interest rates, as the bank considered the arguments in favor of maintaining a stable policy more justified.
At the same time, analysts point out that the Australian dollar could get a boost from China, which announced a broad package of measures to support its struggling real estate market, including easing mortgage rules and calling on local governments to buy unsold homes. Experts believe this could boost sentiment in Australian markets as the countries have close trade ties, FX Street reported.
The US dollar (USD) is being supported by a higher US Treasury yield of 4.44. However, the Federal Reserve (Fed) has been cautious about easing its monetary policy.
Michelle Bowman, a member of the Federal Reserve's Board of Governors, announced that progress on inflation may not be as sustainable as many had hoped. Bowman emphasized that the decline in inflation in the second half of 2023 will be temporary and that there will be no further progress in inflation in 2024.
According to the CME FedWatch tool, markets are pricing in a 49.6% probability that the Federal Reserve will cut rates by 25 basis points in September.
At the time of writing, the AUD/USD is trading at 0.6662, down 0.07% in the past 24 hours.
The nearest resistance for the pair is at 0.6660, a breach of which will open the way to 0.6620. The next support level is 0.6715.
However, from a technical point of view, despite the early losses, AUD/USD remains bullish as the pair continues to develop well above all of its moving averages.
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