AUD/USD pares biggest daily jump in a decade around 0.7250, Australian trade data is seen

  • AUD/USD bulls pause around the two-week high after the daily jump since November 2011.
  • The Fed matched market expectations of a 0.50% rate hike and announced balance sheet normalization in June.
  • Powell’s rejection of a 75 basis point Fed rate hike sparked a long-awaited rally.
  • Australia’s trade numbers for March, the return of China and risk catalysts will be crucial for immediate guidance.

AUD/USD is dripping around 0.7250 after the biggest daily jump since late 2011 as buyers struggle to digest Fed-led gains ahead of Australian trade data. Cautious moves as China begins the week’s trading after several public holidays are also likely to have tested Australian bulls in Thursday’s first Asian session.

After initially encouraging a weaker US dollar and bullish retail sales in Australia, not to mention sustaining post-RBA optimism, AUD/USD rebounded 180 pips after Fed Chairman Jerome Powell rejected the idea of ​​a 0.75% rate hike at the next meeting.

The Fed, however, kept its word by announcing a 50 basis point (bp) hike in the benchmark rate, as well as announcing quantitative tightening from June, initially with a cap of $47.5 billion per month.

It should be noted that the weaker prints from the US ISM services and ADP employment change for April also offered a bullish backdrop for AUD/USD.

Alternatively, anxiety over key Australian data and the sixth round of EU sanctions against Russia, as well as China’s woes, are also joining forces to test AUD/USD bulls as Beijing returns in the markets makes traders cautious.

That said, Australia’s overall trade balance could reach 8,500 million in March from 7,457 million previously. Australian Building Permits for March and China’s Caixin Services PMI for April are also on the economic record and it will be important to watch immediate directions, in addition to risk catalysts.

Technical analysis

AUD/USD prices remain below the 100 and 200 DMAs, around 0.7265 and 0.7285 respectively, despite the latest rally, which in turn teases a pullback towards the previously important hurdle, namely the low of march of 0.7165.