The AUD/USD remains close to its multi-year low and fails to show any signs of recovery.
The USD is supported by the Fed's hawkish stance, which also keeps US bond yields high.
The Australian dollar is also impacted by speculation of an early RBA rate cut and worries about the US-China trade war.
Before the US NFP report is released, bearish traders choose to stay out of the market.
Throughout the first half of Friday's European session, the AUD/USD pair continues its sideways consolidative price movement, staying near its lowest level since October 2022, which was touched the day before. Due to a bullish US dollar (USD), spot prices are currently trading just below the 0.6200 mark and appear susceptible to extending a well-established downward trend that has been in place for the last three months or so.
Following the Federal Reserve's (Fed) hawkish turn, the USD Index (DXY), which measures the Greenback against a basket of currencies, is stable close to a two-year high. In fact, with inflation in the largest economy in the world still high, the US central bank only forecasted two quarter-point rate cuts in 2025. Furthermore, the December FOMC meeting minutes showed that policymakers were in favor of slowing the rate-cutting pace due to stalling inflation progress and saw labor market conditions as gradually improving.
The outlook is still favorable for high US Treasury bond yields, which push some haven flows towards the buck due to geopolitical risks and worries about US President-elect Donald Trump's tariff plans. On the other hand, growing wagers that the Reserve Bank of Australia (RBA) will lower interest rates as early as next month, supported by a decline in core inflation in Australia, are undermining the value of the Australian dollar (AUD). Aside from this, China's economic problems indicate that the Australian dollar's best course of action is to decline.
However, traders appear hesitant to make bold wagers and instead choose to sit on the sidelines until the important US Nonfarm Payrolls (NFP) report is released later in the North American session. In addition, the daily chart's Relative Strength Index (RSI) has nearly entered oversold territory, preventing bears from putting new wagers on the AUD/USD pair. However, the underlying context indicates that any recovery attempt may still be capped and viewed as a selling opportunity.
The USD is supported by the Fed's hawkish stance, which also keeps US bond yields high.
The Australian dollar is also impacted by speculation of an early RBA rate cut and worries about the US-China trade war.
Before the US NFP report is released, bearish traders choose to stay out of the market.
Throughout the first half of Friday's European session, the AUD/USD pair continues its sideways consolidative price movement, staying near its lowest level since October 2022, which was touched the day before. Due to a bullish US dollar (USD), spot prices are currently trading just below the 0.6200 mark and appear susceptible to extending a well-established downward trend that has been in place for the last three months or so.
Following the Federal Reserve's (Fed) hawkish turn, the USD Index (DXY), which measures the Greenback against a basket of currencies, is stable close to a two-year high. In fact, with inflation in the largest economy in the world still high, the US central bank only forecasted two quarter-point rate cuts in 2025. Furthermore, the December FOMC meeting minutes showed that policymakers were in favor of slowing the rate-cutting pace due to stalling inflation progress and saw labor market conditions as gradually improving.
The outlook is still favorable for high US Treasury bond yields, which push some haven flows towards the buck due to geopolitical risks and worries about US President-elect Donald Trump's tariff plans. On the other hand, growing wagers that the Reserve Bank of Australia (RBA) will lower interest rates as early as next month, supported by a decline in core inflation in Australia, are undermining the value of the Australian dollar (AUD). Aside from this, China's economic problems indicate that the Australian dollar's best course of action is to decline.
However, traders appear hesitant to make bold wagers and instead choose to sit on the sidelines until the important US Nonfarm Payrolls (NFP) report is released later in the North American session. In addition, the daily chart's Relative Strength Index (RSI) has nearly entered oversold territory, preventing bears from putting new wagers on the AUD/USD pair. However, the underlying context indicates that any recovery attempt may still be capped and viewed as a selling opportunity.
