Australian Dollar bulls hesitate as they head for the US$0.7960-65 level – USD crawls higher after Fed Powell eases inflation fears

February 24, 2021 - 2 days ago
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The Australian dollar eases slowly away from the refreshed highs posted back in February 2018; however, currently maintains above the US$0.7900 handle.

The US Dollar perked up earlier after U.S. Federal Reserve Chair Jerome Powell eased some concerns about higher interest rates and inflation.

The U.S. economic recovery “remains uneven and far from complete”, Powell told a committee of U.S. senators on Tuesday.

In his semi-annual update on monetary policy, his first delivered under Joe Biden’s presidency, Powell indicated the Fed would not be changing monetary policy any time soon, given the slow recovery in the labour market.

On Wednesday, Powell’s visit to Capitol Hill will continue when he addresses the House of Representatives Financial Services Committee.

Spot gold prices posted modest intraday declines, also undermining the AUD/USD bullish case.

This Thursday, Australia will publish the Private Capital Expenditure q/q, which is expected to have risen by 1.1%, with the previous reading at -3.0%.

Reviewing the technical aspect, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator remains in overbought territory, while the Moving Average Convergence Divergence (MACD) holds to a bullish signal.

The Average Directional Movement Index (ADX) trend indicator is bullish but overheating as it climbs above 40.

At present, it is still uncertain to what extent the bullish momentum can lift the AUD/USD pair given to the bullish signals.

However, the longer the US$0.7960-65 level holds, a bullish retreat could be witnessed to the support at US$0.7800-15. Reassess from there.

Conversely, clearing US$0.7960-65 level exposes the region of US$0.8015-25 to US$0.8100-45.

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