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AUD/USD slips as USD rebounds from two-month low
The pair’s pullback hinges on whether it breaks below 0.7100, with investors also watching upcoming FOMC Minutes for further Fed-rate guidance.
AUD/USD is turning lower after a modest uptick in the Asian session, as the US Dollar recovers from a two-month low reached on Monday. FXStreet notes that the rebound is gaining support from “inflation jitters” tied to higher oil prices, which keep expectations for at least one Federal Reserve interest rate hike in play.
Geopolitical risk is also weighing on the pair, with FXStreet citing the US-Iran standoff and President Donald Trump’s comments that the US is not seeking an extension of a Memorandum of Understanding with Iran that expired on Monday. The piece also points to threats related to the Strait of Hormuz and rising tensions in Yemen, which have pushed oil prices to a two-week high, reinforcing the safe-haven bid for the USD.
The next catalyst for the market is the release of the FOMC Minutes due on Wednesday, according to FXStreet. In the background, the Reserve Bank of Australia’s hawkish outlook is described as a potential tailwind for the Australian Dollar, after Governor Bullock moved to counter a dovish read of the RBA decision and said another rate increase remains “quite possible.”
On the technical front, FXStreet says AUD/USD is still holding above the 100-day and 200-day simple moving averages, and above the 50.0% Fibonacci retracement of the May-June decline at 0.7068, suggesting the recent pullback could be a correction within a broader advance. Resistance is cited near 0.7116 at the 61.8% Fibonacci level, with a higher barrier around the 78.6% retracement.