AUD/USD Resilient with Rebound Towards 0.6850 Before Fed’s Inflation Gauge Amid Uncertain Sentiment

The AUD/USD pair is gearing up for major US data around 0.6825, building on yesterday’s recovery from a seven-week low. The Australian dollar went up because of good news from China and Japan. This changed the earlier risk-off attitude. But worries about Russia and US-China relations, as well as worries about the Federal Reserve (Fed), are making people less bullish.

The recent comments of Japan’s new central bank governor, Kazuo Ueda, have added to yield volatility. This could be because the incoming Governor of the Bank of Japan (BoJ) first defended the policy of easy money and then said he would be willing to tighten it if inflation pressures rise.

Similarly, China’s support for a ceasefire in the Ukraine-Russia war and its signing of an agreement to supply combat drones send contradictory geopolitical signals.

Attempts by US senators to prevent Chinese carriers from flying over Russia on American flights are renewing market concerns, while Treasury Secretary Janet Yellen’s openness to a discussion with Beijing is confronting risk aversion.

China’s Commerce Ministry is asking the US to provide favorable trade conditions while indicating a willingness to take additional steps to stimulate and grow consumption.

Robust US data on the Personal Consumption Expenditure (PCE) Price, weekly initial jobless claims, and the Chicago Fed National Activity Index keep the Fed hawks at the table.

AUD/USD Technical Outlook

The AUD/USD pair briefly touched the 0.6780 level, finding strong support and showing a temporary bullish bias due to stochastic positivity. But the EMA50 is still pushing the price down, which supports the continuation of the bearish correctional trend. The next negative target is 0.6665.

As long as the price stays in the bearish channel on the chart, we expect it to keep going down in the coming sessions. Breaching 0.6925 would signal a return to the primary bullish trend.

Today’s expected trading range is between 0.6750 support and 0.6860 resistance, and the overall trend is expected to be bearish