- The AUD/USD outlook is bullish as the pair quickly recovered after a ceasefire.
- The US dollar and crude oil lost all the gains accumulated after Middle East escalation.
- Market participants expect Fed’s easing to begin as soon as July.
The AUD/USD price rebounded sharply, staging recovery from the losses posted on Monday due to escalated tension in the Middle East. The announcement of a ceasefire weighed on the US dollar that picked strength after America’s attack on Iran’s three nuclear sites. The AUD/USD pair quickly reversed the course as the fear of escalation subsided.
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The initial reaction of the markets with risk-off tone was favorable for US dollar and crude oil. However, the confirmation that Iran’s attacks on US bases in Qatar and Kuwait didn’t cause any casualties, helped stabilize the markets. As a s result, the risk-sensitive Aussie regained traction as the broader risk sentiment turned positive.
The pair reclaimed the 0.6500 level, soaring more than 2% from Monday lows and became the best performing currency. The rally was further boosted by President Trump’s announcement of “complete ceasefire” agreement Iran and Israel. The de-escalation immediately weighed on oil prices and safe-haven assets including US dollar and gold that gave room to a higher yielding currencies like Aussie.
The weekend PMI data of Australia could not leave any impact on the markets, traders have now turned their focus to US monetary policy. Fed officials like Bowman and William indicated that the Fed may cut the rates as early as July. However, the CME FedWatch tool shows a probability of 22% for the July rate cut while it is 77% for September. These developments have weighed further on the greenback.
Investors are now focusing on Fed Chair Powell’s testimony before Congress as markets are eager to find the clues about Fed’s easing policy.
AUD/USD Technical Outlook: Trendline Resistance Pausing Rally
The AUD/USd 4-hour chart shows a solid recovery from the support zone under 0.6400. Five conseucitve bullish candles on the chart reveal a strong uptrend as the price soared above the key moving averages. Moreover, the RSI also rose to 60.0, which means a room for further gains.
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However, the price found mild resistance at the trendline. The pair may consolidate around 0.6500 before continuing higher. The next targets for the bulls reside at 0.6550 ahead of 0.6600. On the flip side, 0.6440 and 0.6380 will be the key support to watch.
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