AUD/USD faces barricades around 0.6980 despite positive RBA minutes, Fed Powell eyed

• AUD/USD is expected to hover below 0.6980 as investors await Fed Powell’s testimony.
• The RBA sees no harm to the Unemployment Rate while addressing the inflation mess.
• The DXY is defending Monday’s low but is expected to remain on the tenterhooks.

The AUD/USD pair has witnessed selling pressure around 0.6980 despite the positive minutes from the Reserve Bank of Australia (RBA). The asset has experienced offers after attempting to surpass the critical hurdle of 0.6980 for the third time from Monday. On a broader note, the asset is displaying a sideways move ahead as investors are counting on the release of the Federal Reserve (Fed) chair Jerome Powell’s testimony for a decisive move.

As per the RBA minutes, the extent of the rate hike announcement for July monetary policy will be 25 basis points (bps) or 50 bps. It is worth noting that the RBA doesn’t see any signs of recession in the current horizon. Household spending is resilient despite depreciated paychecks due to higher price pressures. As per the minutes, the jobless rate is going to remain untouched while fixing the inflation mess, which indicates that the labor market in the Australian economy is extremely tight.

The central bank is focusing on bringing the annual wage growth of 3.5% in order to counter the inflationary pressures as significantly lower wage growth than the price pressures will trim the consumer confidence in the economy.

Meanwhile, the US dollar index (DXY) has witnessed a minor bounce after re-testing Monday’s low at 104.23. The DXY is expected to remain on the sidelines till Fed Powell’s testimony on Wednesday. Investors should focus on further guidance on interest rates to be provided by Fed Powell in his testimony. Apart from that, the dictation on the current status of annual inflation, Core Consumer Price Index (CPI), and the labor market will be of high significance.