- AUD/USD fails to extend Tuesday’s rebound despite refreshing daily top of late.
- Market sentiment remains mildly positive but cautious mood ahead of FOMC tests buyers.
- RBA pleased bulls but Fed needs to validate further upside.
AUD/USD pierces the 0.7100 threshold to renew its intraday high during a mostly quiet Asian session on Wednesday.
The Aussie pair rallied the most in two weeks the previous day on the Reserve Bank of Australia’s (RBA) higher-than-expected rate hike, as well as the US dollar pullback during the pre-Fed consolidation. The latest rebound, however, remains doubtful ahead of the key data/events scheduled for publish during the day.
Among them, Australia’s TD Securities Inflation for April, prior 4.0% YoY, as well as Retail Sales for March, expected 0.6% versus 1.8% prior, will be the immediate catalysts to watch. Following that, the US ISM Services PMI for April may entertain the AUD/USD traders. However, major attention will be given to how the US central bank (Federal Reserve) will respond to the recently heavy inflation fears.
On Tuesday, the RBA raised the benchmark rate to 0.35% versus an expected lift to 0.25%. The Aussie central bank also signaled further moves ahead while citing inflation fears and economic resilience. Also supporting the AUD/USD prices was the US Dollar Index (DXY) pullback as traders brace for the Fed’s widely anticipated 0.50% rate lift, with hidden hopes of doing more than expected to save the US dollar.
That being said, global markets remain mostly sidelined amid a holiday in Japan and China. Even so, risks emanating from Russia and China, due to Ukraine’s invasion and covid resurgence, probe the AUD/USD buyers.
AUD/USD recovery remains elusive until crossing March’s low of 0.7165. The downside move, however, has a bumpy road before hitting the yearly low surrounding 0.6965.