AUD/USD remains under pressure at 0.6833, weighed down by a breakdown of the Head and Shoulders pattern and broad US Dollar strength as markets fully price in a December Fed rate hike.
AUD trades 0.15% lower at 0.6833 as OCBC expects no further RBA hikes and sees the next move as a cut, after the RBA removed 'increasing the cash rate target further if needed' from its guidance. A Head and Shoulders breakdown with price below the 20-EMA at 0.6947 and RSI near 35 reinforces the bearish bias toward 0.6800. Broad US Dollar strength from firming Fed hike expectations adds pressure.
The Dollar Index posted a fresh 18-month/year-to-date high of 103.08, supported by firming Fed hike expectations after hawkish comments from Waller, Logan and Goolsbee. MUFG notes a 25bps December hike is fully priced with 43bps of hikes priced by January and expects the Dollar to trade at stronger levels into year end. The 2-year US Treasury yield has jumped around 33bps from the end of last week.
The Australian Dollar trades 0.15% lower at 0.6833 as markets doubt further RBA rate hikes following a shift in central bank guidance. Simultaneously, the US Dollar Index reached a fresh 18-month high of 103.08, bolstered by hawkish Fed commentary and expectations for back-to-back rate increases in December and January.
Doubts about further Reserve Bank of Australia rate hikes, with OCBC expecting the next policy move to be a cut, combined with a stronger US Dollar as markets price faster Federal Reserve tightening.
Resistance sits at the 0.6900 Head and Shoulders neckline and the 20-EMA at 0.6947; below, the pair could extend its decline towards 0.6800.
Expectations that the Fed will speed up rate hikes after stronger US inflation data, with a 25bps December hike fully priced and around 43bps of hikes priced by January.
Around 102.86 after posting a fresh 18-month high of 103.08 during the day.