On Wednesday, the AUD/USD currency pair tumbled from 0.7025-0.7030, which was its highest point in a week. Near the weekly low at 0.6900, the pair is still being heavily sold in the early European session.
The AUD/USD pair is going down because the US dollar is close to a high that hasn’t been seen in a few weeks. This is because people expect the Fed to tighten its monetary policy. Investors think that the US central bank will stay “hawkish” because inflation has been high for a long time. The bets were right after Tuesday’s important US CPI report and FOMC comments.
The fact that people are less willing to take risks is also good for the safe-haven Greenback. The inversion of the yield curve makes people worry about a recession and makes people less willing to take risks around the world. This hurts the risk-averse Australian dollar and makes the AUD/USD pair move.
After the latest drop, spot prices are back near the 50-day simple moving average. A convincing break below will make bearish traders enter the market and make the recent retracement drop from June 2022’s high last longer.
Trade Idea
Traders are now interested in the US economic calendar, which includes monthly Retail Sales and the Empire State Manufacturing Index.