AUD/USD trims previous gains and retreats below 0.6300

• AUD/USD loses ground and retreats below 0.6300.
• Fed tightening hopes are buoying demand for the USD.
• The dovish RBA minutes weigh on the AUD.

The Australian dollar is giving away gains on the US morning session. The upside attempt featured during the European trading has been unable to break beyond the 0.6340 resistance area, and the pair has pulled back below the 0.6300 level at the time of writing.

The aussie loses steam with the US dollar picking up

The positive risk sentiment seen during the European and early US trading, with the European and US stock indexes in the green, has failed to boost the AUD above recent ranges. The pair remains dangerously close to the 2, 1/2 -year low at 0.6170 as the US dollar crawls higher.

The uptick in US Treasury bonds, with the 10-year benchmark back above 4% has provided a fresh boost to the US dollar, which was trading at one-week lows against a basket of currencies.

Fed tightening hopes are buoying the USD

As the dust from the British U-Turn on its mini-Budget plan settles, the investors seem to have shifted their focus back to the US Federal Reserve’s tightening cycle.

The market is pricing in a practically 100% chance of another 75 basis point rate in November, which is underpinning the US dollar’s strength to the detriment of the AUD, which has depreciated nearly 15% against the US Dollar this year.

On the other hand, the minutes of the latest RBA monetary policy meeting have been dovishly tilted, as the committee members apparently opted to reduce the size of the rate hike and wait to see the impact of monetary tightening on household spending.

Technical levels to watch