The Australian dollar remains on the backfoot and struggles to gather renewed momentum to ignite any rally above US$0.6900 as recession worries linger, while fears that the RBA may be reading the same playbook on rate hikes.
Hopefully, the scheduled speech from Reserve Bank of Australia (RBA) Governor Philip Lowe, around 9:30 pm (AEST) Friday, may ease those fears.
Elsewhere, during his second testimony in front of Congress this week, investors focused on U.S. Federal Reserve Chair Jerome Powell downplaying the idea that government pandemic aid was the key factor fueling U.S. inflation and instead blamed a confluence of global issues, including the war in Ukraine.
U.S. Fed Powell acknowledged those risks in two days of testimony to lawmakers, saying that a recession was possible and that a soft landing would be “very challenging” as inflation hits 40-year highs and interest rates surge higher, making it more expensive for consumers to borrow money.
Based on the technical assessment, the Relative Strength Index (RSI) 3-daily ‘lookback’ indicator is negative. However, it has strengthened and displays mild bullish divergence.
In contrast, the Moving Average Convergence Divergence (MACD) oscillator supports a negative bias, weak bullish divergence seen here, too, with the ADX indicator holding to a bear trend.
Market bulls are expected to regroup from the key support area at US$0.6845-55 and defend this region if challenged, while clearance of US$0.6945 should ignite momentum to US$0.7000-15. Reassess from there.