The AUD/USD pair staged a strong recovery on Tuesday, bouncing back from its recent dip to 0.6630 during the American session. This rebound came as the US Dollar (USD) surrendered its earlier gains, fueled by anticipation and uncertainty surrounding Fed Chair Jerome Powell’s upcoming speech.
Market Drivers: Powell’s Speech and Fed Rate Cut Expectations
- Powell’s Speech in Focus: Investors are keenly awaiting Fed Chair Jerome Powell’s speech for insights into the Fed’s policy outlook and potential timeline for interest rate cuts. His comments on the recent inflation data and the labor market’s strength will be closely scrutinized.
- US Dollar Weakness: The US Dollar Index (DXY) retreated from its recent highs, as market participants reassessed the Fed’s tightening stance and the implications of recent economic data.
- Risk-Off Sentiment: Despite the AUD/USD’s rebound, risk-off sentiment persisted in the market, with S&P 500 futures posting significant losses.
Upcoming Catalysts: US NFP and RBA Rate Expectations
- US Nonfarm Payrolls (NFP): The release of the US NFP data for June on Friday will be a major event for the USD, as it will provide a clearer picture of the labor market’s strength and its potential impact on inflation.
- RBA Rate Hike Expectations: While the Reserve Bank of Australia (RBA) maintained its hawkish stance in the June meeting minutes, suggesting a potential for further rate hikes, market expectations are currently pricing in rate cuts starting from April 2025.
Technical Analysis: AUD/USD Recovers, But Further Upside Uncertain
The AUD/USD pair has rebounded from its recent lows, but further upside potential remains uncertain. The pair is currently facing resistance from the 20-day and 50-day Exponential Moving Averages (EMAs). A break above these levels would be needed to confirm a sustained recovery.
Key Takeaways:
- The AUD/USD pair is recovering amidst US Dollar weakness and Fed rate cut expectations.
- Fed Chair Powell’s speech and the upcoming US NFP data will be crucial for determining the pair’s future direction.
- The technical outlook for the AUD/USD pair remains mixed, with potential for both upside and downside movement.
