- AUD/USD renews intraday low but stays near the four-day top after RBA.
- RBA holds benchmark rate unchanged, reiterates rejection for rate-hikes.
- Anxiety over Russia-Ukraine standoff challenges bulls, DXY tracks firmer yields to raise bars.
- US ISM Manufacturing PMI, Biden’s SOTU will join geopolitical headlines to direct short-term moves.
AUD/USD holds onto the early Asian session’s sluggish moves around 0.7250, recently easing towards an intraday low on Tuesday. The Aussie pair rose during the last two days before the Reserve Bank of Australia’s (RBA) sober comments probed the bulls.
The RBA matched wide market expectations of keeping the benchmark rate unchanged at 0.1%. However, the Aussie central bank’s comments rejecting the need for rate lifts seemed to have triggered the latest AUD/USD moves. “(The RBA) will not increase the cash rate until actual inflation is sustainably within the 2% to 3% target range,” per the RBA Statement shared by Reuters.
Read: RBA: Will not increase OCR until actual inflation is sustainably within 2%-3% target range
Earlier in the day, upbeat activity numbers from Australia and China favored AUD/USD bulls amid a pause in the risk-aversion wave. The reason could be linked to Ukraine-Russia talks that ended without any update the previous day but have been kept on the table for discussion. However, Russia’s criticism of the Western sanctions and aggression of military invasion inside Kyiv suggests that the geopolitical risks have miles to go before easing, which in turn tests the risk-barometer pair.
Additionally, challenging the AUD/USD prices is the firmer US dollar and the US Treasury yields. The US 10-year Treasury yields dropped the most since early December 2021 the previous day, up two basis points (bps) to 1.86% at the latest. The recent rebound in the Treasury yields could be linked to upbeat US inflation expectations. That said, the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, don’t comply with the recently easing Fed chatters as the gauge jumped to the highest since November 23, marked a 2.62% figure by the end of Monday’s North American session. It should be noted that the CME’s FedWatch Tool marked nearly 5.0% probabilities of a 0.50% Fed rate hike in March, versus more than 50% before a few days. While considering this, Atlanta Fed President Raphael Bostic said on Monday, “Today I am in favor of a 25 bps move at March meeting."
Against this backdrop, S&P 500 Futures pause the three-day uptrend, down 0.08% by the press time, whereas Asia-Pacific stocks track Wall Street’s mixed performance of late.
To sum up, challenges to the market sentiment and the firmer King dollar tests AUD/USD buyers, which in turn highlights today’s US ISM Manufacturing PMI for February and US President Joe Biden’s State Of The Union (SOTU) speech for fresh impulse.
Technical analysis
On Monday, AUD/USD printed the first daily closing above the 100-DMA level of 0.7237 in four months, which in turn joins firmer MACD signals to direct the bulls towards a downward sloping resistance line from mid-November 2021, around 0.7275 at the latest.
However, the pair’s further upside hinges on how well the quote crosses the 0.7275 hurdle. Hence, the AUD/USD prices are likely to remain sidelined between the 100-DMA and short-term key resistance line.
