Aussie Falls on Fed’s Tough Stance, Rising US Yields

Fundamental Analysis

* Monetary Musings: The Australian dollar experienced declines against the US dollar following statements made by multiple Federal Reserve officials. A number of Fed officials, including Loretta Mester, John Williams, and Thomas Barkin, suggested that it might be necessary to maintain higher interest rates for an extended period until there is clearer evidence of inflation easing towards the 2% target. Atlanta Fed President Raphael Bostic also remarked that he observed indications of inflation moderating in the latest report. However, he expressed a preference for monitoring the data for May and June to ensure that inflation doesn’t reverse course. Additionally, increased US yields supported the Greenback, adding further pressure on the currency pair.

Technical Analysis

* Technical Breakout: AUDUSD was traded lower following prior retracement from the resistance level 0.6715. MACD which illustrate bearish momentum signal with the formation of death cross suggest the pair to further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 0.6635. Conversely, a potential trend continuation is also to be expected and the price could head back towards 0.6715.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving ahead, the market’s attention will be more on the United States front as there are no major events scheduled on the Australian economic calendar. Moreover, traders may turn their focus to additional speeches from Federal Reserve officials, particularly Governor Christopher Waller, to assess the potential trajectory of Fed interest rates.

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Monitoring

Stay updated on US and Australian data, Fed updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.