AUD/USD Lose Some Monday Ground

The AUD/USD currency pair got pressed under a new sales pressure on Tuesday. This was the first reality for the traders of the pair as the market opened. The development has eroded some parts of the positive movement secured on Monday.

The AUD/USD currency pair had been basking on a two-week high point previously. It was forced into a defensive position in the course of the European session. It was, therefore, last seen trading close to the daily low point.

AUD/USD price chart. Source TradingView

The daily low point is currently in the vicinity of the 0.7075 to 0.7070 area. The most recent optimism of the market was brought by the easing of COVID lockdowns. But the Chinese decisions got eroded by global economic conditions. 

Investors are concerned over a more aggressive policy implementation by leading central banks over inflation. Central banks in Europe and America are working on more interest rates to fight inflation. High inflation rates across the globe have been posing a challenge to economies globally.

Ukraine and China Keep Exerting Pressure

In addition, the war in Ukraine has been increasing the fears over stagnant inflation. The same has been the effect of the COVID situation in China. COVID has especially affected the global supply chain.

These developments have caused a new trend of global risk aversion in trade. Now, it has aided the US Dollar in pulling an average rebound. The US Dollar rebounded from its monthly low point and pressured the Australian Dollar.

The US Dollar got underpinned by the fact that the Feds would be more hawkish. The market expects a more drastic move by the Feds to bring inflation under check. Therefore, attention would be fixed on the Federal Reserve Chairman’s coming statement.

The Fed Chairman, Jerome Powell, is expected to deliver an address later on Tuesday. The Federal Open Market Committee meeting minute is also scheduled for publication on Wednesday. 

The market has priced in a 50 basis point rate increase at the next meetings of the Feds. Market players will watch out for indications about the likelihood of a 75 basis point hike. This is going to influence the US Dollar and its dynamics.

It is also expected that the speech would give direction to the AUD/USD pair. The same is expected of the meeting minutes of the FOMC.

Meanwhile, the Australian Dollar is likely to get support from the RBA’s hawkish outlook. This would help to mitigate many losses for the AUD/USD pair. It, therefore, calls for caution on the side of traders before placing heavy bets. 

Traders are now expecting the publication of the global Purchasing Managers’ Index. It is going to motivate the general market’s risk sentiment. Aside from that, the dynamics of the US Dollar would equally add to generating near-term opportunities.