AUD/USD pair is experiencing bearish pressure

The AUD/USD pair continues to experience bearish pressure, but at the same time resist the attack. Yesterday, sellers of this instrument tried to consolidate in the area of 0.75, breaking through the support level of 0.7600. However, this did not end up successfully. By the close of the US session on Tuesday, the Australian dollar returned the lost points and ended the day in almost the same positions where it started. Meanwhile, the US currency continues to exert pressure, restraining any bullish intentions. Buyers, in turn, managed to show an upward impulse, but failed to reach the peaks (daily high was located at 0.7663, low at 0.7565). As a result, both currencies gathered in a neutral zone, that is, at the base of the level of 0.76, waiting for the next information drivers.

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During today's Asian session, Reserve Bank of Australia's Governor, Philip Lowe, made a speech at Canberra. The announced event at the National Press Club was titled "Prospects for the Coming Year." Economic experts, some politicians and government representatives spoke at the forum, but the Australian dollar only reacted to Lowe's speech, although his rhetoric was secondary. The RBA already announced the main rhetoric regarding the prospects for monetary policy yesterday, during its first meeting this year.

Nevertheless, some clarifying remarks deserve attention. To start off, the Central Bank's chairman ruled out the option of reducing the interest rate to the negative zone. On the one hand, markets do not consider such a scenario among the main ones before. But on the other hand, the regulator ignored this topic at yesterday's meeting. Thus, Lowe's clarification will still be important, especially in the context of the unexpected QE expansion.

At the same time, other positive rhetoric can also be noted. Here, RBA's head announced that the recovery of the Australian economy began earlier and was stronger relative to the expectations of the members of the regulator. In addition, Lowe stressed that in his opinion, there is still "very significant spare capacity" in the Australian economy. He also expressed hope that the government will take new measures of financial incentives, if necessary.

But along with the optimistic words, Lowe also voiced pessimistic ones. He was concerned about the weak pace of wage growth, noting also weak inflation and an uneven recovery in the labor market. In this context, the RBA Governor stressed that the interest rate will be maintained at the level of 10 basis points for as long as necessary. This is at least for several more years, until the stated goals for inflation and unemployment are achieved. At yesterday's meeting, the regulator outlined a new benchmark in this regard – 2024.

The market ignored the "dovish" comments, as all this was announced yesterday after the results of RBA's February meeting. The fact that Philip Lowe ruled out the option to cut rates to the negative area allowed buyers of AUD/USD to move away from Wednesday's Asian session lows and update the local high at 0.7623. However, the weak price growth did not continue, as traders drift at the base of the 76th mark.

All the above-mentioned suggests that the Australian dollar has a certain margin of safety: RBA "dovish" results and the subsequent comments of Philip Lowe did not help the AUD/USD bears to break through the level of 0.7600. As soon as the pair declined below this target, buyers were immediately attracted to them. As for the future prospects for the Australian dollar, the role of the US currency will be significant. The US dollar will serve as a drive for the growth or decline of the AUD/USD pair. Although the "Aussie" endured the attack, it still lacked strength to continue growth. In this case, greenback's dynamics will play a decisive role.

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In turn, the US dollar index is holding above the 91st mark. The growth in Treasury yields, as well as the emerging uncertainty about the prospects for the implementation of the "American Rescue Plan" (aid package to the US economy in the amount of $ 1.9 trillion) supports the US currency. The main difficulty for the resonant bill will unfold in the Senate, so the AUD/USD pair will feel some pressure in the coming days. This fact will not allow buyers of the pair to develop more or less large-scale growth, while sellers will counterattack, trying to consolidate within the level of 0.7500.

Technically, the pair is on the lower line of the BB indicator in the daily time frame. The nearest support level is located at 0.7600. Judging by the attack of dollar bulls, the AUD/USD bears will test this target in the medium term. We can assume that they will most likely move to the 75th mark temporarily. Therefore, the main support level is located slightly lower – around 0.7540 (upper border of the Kumo cloud on the same time frame). Taking into account the Australian dollar's stress resistance, as well as yesterday's price dynamics, the option of opening long positions in this price area is possible. However, longs are currently risky, as the pair is dominated by bearish sentiment.

The material has been provided by InstaForex Company - www.instaforex.com

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