Australian Dollar Struggles Against Stronger US Dollar Amid Rising Yields
The Australian Dollar (AUD) is struggling to regain ground against the US Dollar (USD), falling back from a high of 0.6975 during the European trading session on Tuesday. The AUD/USD pair now sits around 0.6964, pressured by a stronger US Dollar supported by surging US bond yields.
The US Dollar Index (DXY) is trading 0.15% higher near 102.25, close to its annual high of 102.54. Rising yields on US-backed securities and elevated inflation projections continue to strengthen the Greenback, despite some correction in oil prices. Federal Reserve officials have emphasized that high inflation remains a challenge, signaling one more interest rate hike this year.
Federal Reserve’s John Williams delivered a moderately hawkish message, indicating a data-dependent stance that still prioritizes controlling inflation. The Fed’s September rate hike brought policy rates to 3.75%-4.00%, with projections for inflation to remain at 3.5% this year and only reach the 2% target by 2028. Investors are awaiting the Federal Open Market Committee (FOMC) minutes from the September policy meeting, set to be released on Wednesday.
Technically, AUD/USD trades at 0.6962 with a bearish near-term bias. The pair remains below the 20-day Exponential Moving Average (EMA) at 0.7035, suggesting rallies are capped. The Relative Strength Index (RSI) at 34 hints at potential easing of selling momentum, but further declines could be on the horizon.