Audusd Falls Down As Us Dollar Gains Strength

 Audusd Falls Down As Us Dollar Gains Strength

AUD/USD Falls Down To 0.6400 As US Dollar Gains Strength

The AUD/USD came under renewed selling pressure after approaching the resistance zone located near 0.6460. Another factor that pushed the AUD lower was the fact that DYX (Dollar index) is now sitting at 104.00, which is almost a 2-3 month high.

The bigger picture of the Aussie economy reveals that the risk of recession is very real, which is also showing its effects on the AUD as well. And since Australia's economy is also closely tied to China (one of the largest trading partners), it makes sense for the AUD to come under pressure.

On the US front, the S&P 500 index will likely open with an upside If we look at the price action of the futures contract. Furthermore, the liquidity is also expected to stay elevated as we get closer to the Jackson Hole Symposium.

US Economy Is Showing Resilience

As for why the Dollar Index is at such high levels, it is due to the fact that strong economic indicators will allow the Fed to keep rates at high levels or even introduce some rate hikes.

According to the Fed's president from Richmond, there is no signal from the demand side, and high inflation is an indication that the inflation is likely to drop. However, he also added that the economic environment to achieve this requires high-interest rates.

When asked about the recession in the USA, Thomas Barkin said that the situation on the ground is not as severe as it appears.

On the Australia front, the RBA is also committed to its policy & will not introduce any changes before September. Furthermore, inflation is showing signs of a cooldown while the labor market shows that hiring speed is slowing down. This will allow the RBA to have more room to make any further decisions regarding the monetary tightening.

When we combine all of this, it becomes clear that the AUD/USD pair will remain bearish to neutral in the near term.

Trending Stories