- Australian Dollar falls as Wall Street wavers.
- US Dollar gains momentum despite lower US yields.
- AUD/USD under pressure, testing level under the 0.6630 support.
The AUD/USD is falling sharply on Tuesday amid a stronger US Dollar and a mixed market sentiment. The pair is trading at 0.6627, the lowest level since April 11. It is testing a relevant support area at 0.6630.
AUD under pressure ahead of Australian inflation
The AUD/USD started to decline on Asian hours, as Iron one prices continued to sink. After a pause, the pair resumed the decline amid US Dollar strength. The US Dollar Index is up by 0.50%, above 101.80, about to test Monday’s highs.
The Greenback is rising even as US yields decline. Such behavior reflects more demand for safety. In Wall Street, stocks are falling with the Dow Jones down 0.39% and the Nasdaq 1%, amid mixed US data and renewed banking concerns.
US data released on Tuesday showed an increase in the S&P/Case-Shiller Home Price Index in February of 0.4% from a year ago; a 9.6% surge in New Home Sales in March and a decline to six-month lows in CB Consumer Confidence in April.
On Wednesday, Australia will report inflation data. The consensus is for the Consumer Price Index to have risen 1.3% in the first quarter; and for the annual rate to decline from 6.8% in February to 6.6% in March. Those numbers will be relevant ahead of next week’s Reserve Bank of Australia meeting.
The AUD/USD bottomed at 0.6627. It is testing levels below the 0.6630 support area. A consolidation below that zone would expose 0.6600. A break lower would target the March low at 0.6560.
A recovery above 0.6670 would alleviate the bearish pressure. The next resistance is 0.6710.
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The Australian Dollar (AUD) has extended its bearish trend against the US Dollar (USD) in the forex markets, reaching two-week lows below 0.6630.
The AUD/USD pair started the week in a bearish note and was seen extending its slide below 0.6630 during the Asian session. The pair previously traded as low as 0.6610 during the previous week and is currently hovering around 0.6610/15 region.
The dismal performance of the AUD comes as a result of a combination of factors. Firstly, the US Dollar is looking bullish against a wild basket of currencies amidst the resurgence in coronavirus risks and lockdown news across the world. The latest US housing and manufacturing data further added fuel to the ongoing USD bull run.
In addition, weakness in the Australian housing market, slowing recovery from the coronavirus pandemic and uncertainty in the global economic recovery criteria seem to be weighing on the performance of the AUD.
On the other hand, investors were also react to the latest comments from Federal Reserve Chair Jerome Powell, who said in a speech on Thursday that the US economy is going to require an additional burst of the central bank stimulus. This is likely to keep a lid on the US Dollar’s gains and could help the AUD/USD pair recover some of the losses.
It remains to be seen if the AUD/USD pair is able to stage a recovery or further extends the slide in the next trading sessions. Analysts are also keeping an eye on the latest US NFP report, which is scheduled to be released later this week.