New Dip Buying Arises in the European Session

The AUD/USD currency pair has attracted investors to buy the dip. This happened close to the mid-0.7000 area while the European session was on. Nevertheless, the pair struggled to consolidate the movement.

It was last seen to trade just points under the 0.7100 benchmarks. It was almost unchanged for the day.

AUD/USD price chart. Source TradingView

There are no more surprises to emanate from the minutes of the FOMC meeting. The possibility of the Feds halting rate increases pulled down Treasury bond yields. Hints were given to that effect from the FOMC meeting minutes.

This development, as well as the strong rebound in the stock markets, undermined the Dollar. The US Dollar lost its safe-haven value to the riskier Australian Dollar.

After noting that, the deteriorating global economic condition has a lid on major optimism. Investors are still concerned about the planned aggressive policies by leading central banks. The policies are to combat the escalating global inflation rates.

Heightened Concerns Around the Global Economy

Investors fear that it could worsen the global economic situation. This is with regard to the war in Ukraine and the COVID cases in China. It then acted as a tailwind to the US Dollar and capped gains for the AUD/USD pair.

From a technical point of view, spots’ prices have oscillated in a wider range since the week started. The price action might be suggesting that the market has priced in the RBA’s hawkishness. It gave signs that there might be a higher interest rate increase in June.

The Reserve Bank of Australia’s signal calls for caution on the side of bulls. The market is now looking forward to the economic docket in the US. It is expected to feature the publication of the preliminary quarter one GDP.

The preliminary GDP of the US reveals that the country’s economy shrank by 1.5%. It was an annual rate of shrinking that occurred in the first quarter of the year. The report came in weaker than the forecasted estimate of 1.4% and the anticipated 1.3%.

As expected, it caused a new selling of the US Dollar. Thus, affecting the safe-haven status.  

The docket should also feature the weekly report on jobless claims and house sales. The report from it might be influential on the US Dollar and the dynamics around it. It would also give a new momentum to the AUD/USD currency pair.

Traders will be taking more cues from the general risk sentiment. They will be actively searching for trading opportunities in the short term.