AUD/USD to Break 74 Cents

AUD/USD to Break 74 Cents

AUD/USD to Break 74 Cents

The worst performing currency today was the Australian dollar which dropped more than 1% intraday on the back of lower gold, iron ore and copper prices. Gold fell close to 1.5%, taking out support at 1,250. Although data has been good, the RBA’s caution should keep AUD/USD under pressure. In contrast, we could see further USD strength as Fed fund futures are now pricing in a 93% chance of a rate hike in June. We continue to be astounded by these odds as today’s FOMC statement was not exceedingly hawkish but as futures were only pricing in a 69% chance of a hike on Tuesday, we have to respect the power of dollar bulls. It is this blind optimism that is fueling bonds, Fed fund futures and the U.S. dollar. At this stage the dollar will probably continue to March higher into Friday’s non-farm payrolls report as investors position for the labor market strength that the Fed is suggesting.

Technically AUD/USD has broken below the 38.2% Fib retracement of the 2016 rally and now appears poised for a move below 74 cents

Chart Of The Day

Leave a Comment

Your email address will not be published. Required fields are marked *