AUD/USD holds to gains but faces solid resistance around 0.6900

• AUD/USD sets to finish the week with gains, up 1.54%.
• Wobbling sentiment keeps the AUD/USD seesawing in a 50-70 pip range.
• AUD/USD to remain below 0.7000 according to National Australia Bank.

The AUD/USD rally shows signs of losing steam but remains up in the day after recording its first losing day out of the last five on Wednesday, though at the time of writing, it registers minimal gains of 0.14%. The AUD/USD is trading at 0.6897 amidst a trading session characterized by fragile sentiment.

AUD/USD Thursday’s price action witnessed the pair opening around 0.6880s, below the 0.6900 figure. However, it climbed to the daily high at 0.6916 before retreating to the 0.6850s area, hitting a daily low at 0.6858; once the dust settled, it is trading at current levels.

AUD/USD seesawing as sentiment swings amidst a volatile session

Sentiment remains fragile, shifting throughout the day. The ECB’s first hike in 11 years, the global economic slowdown looming, led by China and US recession fears lingering in traders’ minds, keep riskier assets on the backfoot. Reflection of that is the AUD/USD seesawing in a 50-70 pip range, with no apparent bias. However, during recessionary times, the greenback is king.

In the meantime, in tone with recent news of US companies halting hiring, namely Apple, Google, and Ford; the US Department of Labour unveiled that Initial Jobless Claims for the week ending on July 16 increased by 251K, more than the 240K estimated, hitting a fresh 8-month high. Claims rose when the Fed it’s raising rates to tame stubbornly high inflation. Nevertheless, it’s a consequence that US workers would have to deal with until the US central bank begins to see inflation slowing down.

Meanwhile, the Philadelphia Fed Manufacturing Index in June declined for the second consecutive month to -24.8 from -12.4. The report said that “on balance, the firms continued to report increases in employment, but the employment index declined 9 points to 19.4, the lowest reading since May 2021.”

On the Australian side, the Reserve Bank of Australia (RBA) Governor Philip Lowe emphasized that higher rates would be needed to anchor inflation expectations, he said on Wednesday.

AUD/USD to remain below 0.7000 according to National Australia Bank

“We think the USD has not yet peaked given a hawkish Fed and rising concerns over an imminent global recession,” said analysts at National Australia Bank in a note.

“Our stronger for still longer dollar view implies a more extended period below 0.70 for Aussie/dollar with the currency seen broadly contained in a $0.65-0.70 range over coming quarters.”

AUD/USD Key Technical Levels