AUD/USD inches upward amid USD weakness as geopolitical tensions arise

• AUD/USD lifts to 0.6422, benefiting from USD pressure as US Treasury yields recede.
• Geopolitical tensions, with conflict between Israel and Hamas, introduce potential headwinds for AUD.
• Upcoming US and Australian inflation data, alongside continued Fed commentary, to steer pair’s direction.

The Australian Dollar (AUD) registered modest gains versus the US Dollar (USD) late in the North American session, with the latter remaining under selling pressure as US Treasury bond yields began to pair their earlier losses. At the time of writing, the AUD/USD is trading at 0.6422, gaining 0.21% after bouncing from daily lows of 0.6390.

Aussie Dollar gains traction vs. a wavering US Dollar, while geopolitical and economic data looms large

AUD/USD continues to be driven by market mood as Wall Street prints gains of between 0.43% and 0.70%. Nevertheless, it could take a hit as the White House asks the US Congress to provide additional help to Israel amidst a conflict between the latter and Hamas that erupted over the weekend.

Data-wise, the US economic agenda featured the New York Fed Inflation expectations poll for September, which showed Americans are pessimistic about elevated prices, as they see inflation to remain at 3.7%, up from 3.6% in 12 months from now. For three years, they revised its target upward from 2.8% in August to 3%. Other data showed US small businesses are turning pessimistic, as the NFIB index came at 90.8, below forecasts of 91.4. The reasons behind the sentiment is high prices and labor shortages.

On the Australian side, business conditions remained resilient in September as inflation decelerated. At the same, October’s Consumer Sentiment rebounded as rates remained unchanged, but the mood remained clouded amid the increase of cost living.

Ahead of the week, the US economic agenda will feature the producer and consumer inflation on Wednesday and Thursday, respectively, while the Fed parade continues. On the Australian front, Consumer inflation expectations will be featured on Thursday.

AUD/USD Price Analysis: Technical outlook

The AUD/USD daily chart portrays the pair was shy of testing the 50-day moving average (DMA) at 0.6436, which exacerbated a retracement towards the 0.6420 area, opening the door for a downtrend continuation. For sellers, they must drag prices below 0.6400 to gather momentum to drive the spot price towards the year-to-date (YTD) low of 0.6285. Conversely if AUD/USD buyers reclaim the 50-DMA, that would open the door to challenge the 0.6500 figure.