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The Australian Dollar Corrects after Two-day Decline

2/23/2023 10:32 AM

The AUD/USD pair shows a moderate increase, correcting after a two-day decline, as a result of which local lows from January 6 were updated. The positive dynamics is largely due to technical factors and the massive closing of long positions in the American currency after yesterday's publication of the February minutes of the US Federal Reserve meeting, which reflected the "hawkish" sentiment of the regulator, which will most likely mean a longer period of maintaining a high interest rate. As for the limit to which the rate can be increased in the next few months, investors still converge on around 5.00%.

The pressure on the positions of the Australian currency yesterday was also provided by not the most confident macroeconomic statistics. The volume of Construction Work Done in Australia in the fourth quarter of 2022 decreased by 0.4% after an increase of 2.2% in the previous period, while analysts expected an increase of only 1.5%. In turn, the data on the Wage Price Index for the same period reflected a decrease in the indicator from 1.0% to 0.8% on a quarterly basis, and an increase from 3.1% to 3.3% on an annual basis, with a forecast of 3.5% . The positive dynamics reached a maximum over the past ten years, which increases the fears of investors who believe that an inflationary spiral may form in the country.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is going down preserving a stable sell signal (located below the signal line). Stochastic retains a steady downtrend but is located in close proximity to its lows, which indicates the risks of oversold Australian dollar in the ultra-short term.

Resistance levels: 0.6850, 0.6900, 0.6950, 0.7000. | Support levels: 0.6800, 0.6750, 0.6700, 0.6650.

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