On Tuesday, March 15, in the European session, AUD/USD is trying to recover some of its previous losses.
- On Tuesday, the AUD/USD received some buying and recovered from a two-week low.
- The Russia-Ukraine situation and Fed rate hike expectations should hold any significant gains in check.
- Yields remain firmer around multi-day highs, equities fall, commodities rise, and the DXY remains on the lower side.
AUD/USD fundamental forecast
The AUD/USD currency pair consolidates intraday losses after returning from the lowest levels in two weeks, which were reached just a few minutes ago.
Bulls remain on the edge
After China reported stronger growth in retail sales, fixed-asset investment, and industrial production figures on Tuesday, the pair saw some buying during the day.
Due to its risk level, AUD/USD buyers appear to be challenged by rising Covid difficulties in China and ambivalence over the Moscow-Kyiv peace negotiations.
President of Ukraine Volodymyr Zelenskyy announced the resumption of peace talks, and his aide Oleksiy Arestovych hinted at a peace accord with Moscow by the end of May.
The trouble down under
Iron is Australia’s most valuable commodity, and prices have been rising in anticipation that China will utilize infrastructure expenditure to boost growth.
There were also rumors that Beijing might favor a significant increase in local coal output to meet its energy demands, putting downward pressure on coal prices.
An economic downturn in China would complicate the Reserve Bank of Australia’s (RBA) decision to raise interest rates.
DXY, down, not out
The decline in the US dollar could be ascribed to profit-taking amid falling US Treasury bond yields, but several reasons could limit the downside.
The DXY stood at 98.881, down 0.23 percent on the day. Mostly owing to dips against the EUR, but close to its all-time high of 99.415 set a week ago.
US rate hikes
At its meeting on Wednesday, the US Federal Reserve is expected to raise rates for the first time since the pandemic, with markets looking for clues about the speed of future rate hikes.
The markets appear to believe that recent geopolitical concerns will have minimal impact on the US central bank’s decision to raise its target funds rate to curb inflation pressures.
Key data releases from AUD
The Aussie has a quiet day today. However, we’ll see Employment Change on Thursday.
Key data releases from the US
The Producer Price Index and the Empire State Manufacturing Index will be released later today during the early North American session on the US economic calendar.
The attention will be on the outcome of a two-day FOMC policy meeting, which is expected to be released during Wednesday’s US session.
What’s next?
Moving forward, risk catalysts will be vital to keep an eye on for new impulses, with China and the Russia-Ukraine situation in mind.
AUD/USD technical analysis: slight uptick?
AUD/USD is now trying to stay above the 0.7180 level. So far, the pair has gained 0.01%. The pair is slightly above its 100-day moving average on the daily chart, and the RSI is neutral.
AUD/USD is now hitting the 0.7187 level. A fall below 0.7149 will bring the pair towards the 0.7111 support level. If the pair falls below this level again, it will challenge the next support level, at 0.7036.
On the upside, the Aussie can go towards the next resistance level, around 0.7236. A break over 0.7338 will pave the door for a test of the following resistance level of 0.7376.
