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AUD/USD Settles Close to Weeks’ Top Under Mid-0.7100

The Pair Hit a High Note

The AUD/USD pair holds its ground with the bided tone in the early European session. It was observed to be trading close to a high point of three weeks. The latest was under the mid-0.7100 area.

A number of factors aided the AUD/USD pair in gaining solid traction on Friday. It eventually broke out in a trading range of many days. 

AUD/USD price chart. Source TradingView

The Australian Dollar keeps pulling support from the RBA’s hawkishness. The bank gives signs of a possibly higher rate in June. This is along with the increased inflation risk.

Aside from the above, the continuous sale of the US Dollar gives more boost. It cushions the Australian Dollar and aids its bullish trend.

Possible Rate Increase Halt

The minutes of the FOMC that were published on Wednesday brought new possibilities along. It indicated that the Feds might halt the cycle of interest rates. The halt might occur after 50 basis points get implemented in June and July.

If the rate halts happen, it would be in the midst of deteriorating global economics. The possibilities were escalated by the publication of the preliminary US GDP data. The data show that the US economy shrank by 1.5% on an annual basis.

This factor pulled down the bond yield on the US benchmark ten-year yield. The Treasury bond yields dropped to a low point of six weeks. In conjunction with the risk-on mood, it weighed so much on the US Dollar.

Whereas, the intraday increase upward boosted the price of the spots above 0.7125. It is the supply area and seems to have got the stage up for more gains. 

Therefore, a follow-up strength aimed at reclaiming the 0.7200 benchmark looks distant. The momentum might then be extended to the 100-period simple moving average. The next SMA is in the vicinity of 0.7230 to 0.7235.

Traders now look forward to the central US PCE Price Index. The Feds prefer it as a measurement of inflation. It would give a new impetus during the North American session.

Poor market sentiments due to risk barometers have been a challenge to AUD/USD traders. Among them is the latest news that the US is planning economic talks with Taiwan. The talks are to pose a challenge to China in its dealings with Taiwan.

The global economy is still slowed down as a result of the war in Ukraine. On the same lane is the COVID woes plaguing China.

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