Australian Dollar Stumbles Against Stronger US Dollar Amid Rising Yields
The Australian Dollar (AUD) has struggled to regain momentum against the US Dollar (USD), falling back from a high of 0.6975 amid a strengthening Greenback. The AUD/USD pair dropped to around 0.6964 during Tuesday’s European trading session, as surging US bond yields lent support to the USD. The Federal Reserve’s signal in September of one more interest rate hike this year has kept the Dollar firm, with yields on US-backed securities continuing to rise despite some correction in oil prices.
The US Dollar Index (DXY), which measures the Dollar’s value against six major currencies, climbed 0.15% to near 102.25, nearing its annual high of 102.54. Fed officials have emphasized that high inflation remains a challenge, though they have tempered the urgency for further rate hikes. Fed’s Williams delivered a moderately hawkish message, reinforcing the likelihood of one more rate hike this year if economic conditions align.
Technically, AUD/USD remains bearish in the near term, trading below the 20-day Exponential Moving Average (EMA) at 0.7035. The Relative Strength Index (RSI) at 34 suggests selling momentum may be weakening, but the pair remains vulnerable to further declines without nearby support levels. Investors are now awaiting the Federal Open Market Committee (FOMC) minutes from the September policy meeting, set to be released on Wednesday, for further clarity on the Fed’s stance.