AUD/USD Price Prediction: Aussie Holds $0.67 as Fed Pressure Weakens Dollar
The AUD/USD pair kept its feet above $0.6700 as the European session drew to a close, and it just kept on trucking with a bullish vibe...
Quick overview
- The AUD/USD pair remains above $0.6700, buoyed by concerns over the US Fed's independence and a weaker dollar.
- Market uncertainty is heightened due to a criminal investigation involving Federal Reserve Chair Jerome Powell, impacting confidence in the dollar.
- Mixed economic data from Australia has not hindered the AUD, as signs of stability support its value.
- Technically, AUD/USD is in a shallow upslope channel, with key levels around $0.6703 and $0.6750 influencing trading strategies.
The AUD/USD pair kept its feet above $0.6700 as the European session drew to a close, and it just kept on trucking with a bullish vibe as the US dollar hit another speed bump. It’s no surprise, given growing concerns about the US Fed’s independence and mixed signals from the Australian economy.
At the heart of the dollar’s weakness right now is news that the Feds are looking into some shady business involving Federal Reserve Chair Jerome Powell. The whole thing has unsettled markets, and people are starting to worry that politics might get in the way of the Fed’s decision-making. As confidence in the dollar wobbles, currencies that are a bit more adventurous, like the Aussie, are finding some space to pick up the pace.
Fed Independence Concerns Are Starting to Cast a Shadow Over the Dollar
The fact that US authorities are looking into a criminal investigation linked to Powell’s testimony is creating a whole new level of uncertainty in the markets. Powell himself has said it’s unprecedented, which is just fueling fears that the Fed’s independence might be under threat.
And in the currency markets, it’s not just about the headlines. If people start to think that the Fed’s independence is at risk, that tends to undermine confidence in the dollar. As the world’s reserve currency, that’s a big deal. So it’s no surprise that AUD/USD has been getting a bit of a boost, even though traders are still being cautious ahead of that big US inflation data and speeches from Fed officials.
Aussie Data’s Mixed Messages Haven’t Deterred the AUD
The latest Aussie economic data was mixed, but it didn’t do much to hurt the Aussie’s cause. The ANZ job ads fell by 0.5%, but it was a smaller decline than last month – so things aren’t as bad as they seem. At the same time, household spending rose by 1.0%, which is a solid result.
This mixed bag of data has actually been good for the Aussie, because it suggests that there’s a bit of stability in the economy rather than anything too bad happening. For now, markets seem happy to price in that stability, and that’s keeping AUD/USD propped up above recent lows.
AUD/USD Technical Outlook: The $0.6740 Zone in Focus
From a technical point of view, AUD/USD is trading around $0.6716 after making a pretty sharp recovery from that $0.6663 low. There was a bullish rejection candle at support, which marked the start of the recovery, and then a break above a short-term trendline.
The pair is now chugging along in a pretty shallow upslope channel, and the 38.2% Fibonacci retracement level near $0.6703 has actually turned into a key pivot point for the pair. Price has reclaimed its 20-day EMA and is holding above its 50-day EMA around $0.6702. Although the 100-day EMA near $0.6750 is capping things for now.
Momentum is looking constructive, with the RSI near 66, suggesting strong buying interest, though some near-term consolidation can’t be ruled out.
Trade idea: Buy some pullbacks near $0.6705 and target $0.6740, with a stop below $0.6685.
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