New Purchases Drawn

The AUD/USD was able to consolidate on its constant intraday climb through the part of the European session, and it finally got up to a new daily height in the vicinity of 0.7380 to 0.7385 area almost an hour before this report.

AUD/USD price chart. Source TradingView

The currency pair was also able to draw some new purchases close to the 0.7340 area or the 50-period daily moving average support line on Tuesday, and it has presently pulled back a key part of the slide it had overnight to a low point of one month. 

In the published minute of its board meeting in April, the Reserve Bank of Australia sounded a note of warning that the increasing inflation rate might have hastened the timing of the country’s first interest rate increase since 2010. This was also considered a major factor that gave some support to the Australian dollar, although the continuous purchase of the US dollar might be placing a lid on significant future gains meant for the AUD/USD currency pair.

The Possibility of 75 Basis Points

As a matter of fact, the major US dollar index soared to the highest level it had been since April 2020 as there are wide expectations that the US Federal Reserve would put more pressure on the US monetary policy at a more rapid rate in order to combat the more volatile inflation scourge since 1981. In addition, the President of St. Louis Federal Reserve, James Bullard, stated on Monday that the US Federal Reserve cannot increase rates by 75 basis points. Alongside the concerns that the war in Ukraine is getting worse by the day, this interest rate situation led the US Treasury bond yield to a high in many years. This is expected to keep underpinning the US dollar.

However, the AUD/USD currency pair, as things stand, seems to have broken a losing streak over the course of four straight days, and it continues to remain at the hand of the US dollar and its price dynamics. Bearing that in mind, it is right to wait out for an experience of a follow-up sale before it is confirmed that the latest pullback experienced from the 0.7660 zones or the year-to-date height has completely run its full circle and then placing any bullish wagers.

The general market now anticipates the American docket, which is expected to feature the publication of Building Permits later in the North American session.