AUD/USD Hangs on Above 0.7180 While Dollar Index Touches Monthly Low

Market Mood Aids the Aussie

The AUD/USD currency pair stands firm close to the high points of the past week at 0.7189. The risk-on mood of the market is preferred by market players. This is as they expect a slide in the coming Nonfarm Payroll of the US.

Other currencies that are risk-sensitive have been gaining traction while the US Dollar got dropped. The major is fast approaching a retest of its monthly high point of 0.7266. Trying to achieve this before the Australian GDP and US NPF come in.

AUD/USD price chart. Source TradingView

The US Dollar index has fallen off again to a monthly low point of 101.43. The low speculations around the coming NFP have forced investors to drop the US Dollar. The preliminary estimation of the NFP is 310,000 versus the initial 428,000.

A lower Non-farm payroll might reduce the Federal Reserve’s hawkishness. It might lead the Feds to increase interest rates by just one 50 basis point. This is against the expected three jumbo increases before this year ends.

In Australia, on the other hand, investors expect the publication of the GDP on Wednesday. The yearly GDP is speculated to come in at 1.6% versus the initial 4.2%. Whereas, the quarterly figure might drop to 0.6% versus the initial 3.4%.

A poor performance from the Australian Dollar could weaken the AUD/USD pair going forward. The pair’s bullish traders are currently taking a break after the highest jump since March.

An absence of a relevant event is obstructing the AUD/USD pair’s move in the vicinity of 0.7150. The Asian session on Monday, thus, seemed very bland. As noted earlier, the incoming NFP looks to test the bulls of the pair.

Other factors posing a challenge are COVID fears and the ongoing battle of Donbas. Furthermore, the weakness of the US Dollar could be connected to the AUD/USD pair gains. Comments from Fed officials regarding a 50 basis point increase in rates weigh on the USD.

The minutes of the FOMC also brought up concerns about reduced interest rates in September. The US PCE report for April that came in on Friday was a mixed one. The central PCE came in at the forecasted 4.9% year-on-year against 5.2% initial.

The Personal Income increased less than envisaged but personal expenditures rose. While these are on, Wall Street declared yet another favorable day. However, there appears to be no significant change in the US ten-year Treasury yield.

The S&P futures 500 posted a 0.20% gain recently. AUD/USD traders should be giving attention to risk catalysts for new momentum. This is with respect to the bank holiday in the US and the less busy calendar.

Technical Perspective

An ascending trend line spanning two weeks is directing AUD/USD buyers to the 50-period DMA. It is also pointing them towards the monthly highest point both at 0.7260 and 0.7265 respectively.