AUD/USD Bears Drill Multi-Day Bottom To Approach 0.6500 As US Dollar Traces Firmer Yields

AUD/USD takes offers to renew the lowest levels in six months, around 0.6520, heading into Thursday’s European session. In doing so, the Aussie pair justifies the market’s USDollar demand amid indecision surrounding the US debt ceiling extension and the Fed concerns.

Following the Reserve Bank of New Zealand’s (RBNZ) dovish hike, the market participants expect the Reserve Bank of Australia (RBA) policymakers to follow the neighbor’s steps and amplify the RBA versus Fed divergence. The same joins this week’s FOMC Minutes and the Fed talks to weigh on the Australian Dollar (AUD).

Per the Minutes of the latest Federal Open Market Committee (FOMC) Meeting, the policymakers are divided about the latest 0.25% rate hike from the US central bank. The same doubts the market’s bets on another such move in June even if Atlanta Fed President RaphaelBostic and Federal Reserve Governor Christopher Waller prod the hawkish Fed concerns.

Elsewhere, US policymakers’ inability to deliver a debt ceiling extension deal and the looming weekend for the House Representatives contrasts with the negotiators’ view that they see progress in the latest round of talks. Even so, global rating agencies like Fitch and Moody’s turned cautious about the US credit rating status while the US Treasury Department accepted their fears.

Against this backdrop, the US stock futures lick its wounds while the US Treasury bond yields remain firmer at the highest levels since mid-March.

Looking ahead, the US weekly Jobless Claims, the Chicago Fed National Activity Index, and Pending Home Sales will decorate the calendar. However, the debt ceiling talks will be crucial to watch for precise directions.

Technical analysis

AUD/USD pair’s sustained downside break of an 11-week-old support-turned-resistance and the 61.8% Fibonacci retracement of the quote’s October 2022 to February 2023 upside, respectively near 0.6620 and 0.6550, keeps bears hopeful. That said, the 61.8% Fibonacci Extension (FE) of its February-May moves, near 0.6445, lures the pair sellers.

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