Anna 
The AUD/USD pair is experiencing a second consecutive day of positive momentum on Thursday, edging closer to the 0.6600 mark during the early European session. Bulls are seeking to extend the upward move beyond the technically significant 200-day Simple Moving Average (SMA) and the recent recovery from the multi-week low of 0.6480-0.6475 reached on Tuesday.
The subdued demand for the US Dollar (USD) is a key driver of the Aussie’s rebound. The USD Index (DXY) is hovering near its lowest level since early February, fueled by uncertainty surrounding the Federal Reserve’s (Fed) rate-cutting path. Fed Chair Jerome Powell, in his semi-annual congressional testimony on Wednesday, indicated that the central bank would cut interest rates this year if there is more evidence of inflation falling to the 2% target. However, Minneapolis Fed President Neel Kashkari tempered expectations for aggressive policy easing, suggesting a potential reduction in the number of cuts in 2024 to only one.
The mixed signals from the Fed and ongoing uncertainty contribute to limited downside for US Treasury bond yields. Additionally, a generally weaker tone in equity markets acts as a potential tailwind for the safe-haven USD. However, China’s stronger export and import growth in the January-February period offset some of the negative factors, supporting the AUD/USD pair’s near-term appreciation.
Traders are now closely watching Fed Chair Powell’s second day of testimony, along with US Weekly Initial Jobless Claims and Trade Balance data, which will influence the USD. The focus remains on the US Nonfarm Payrolls (NFP) report scheduled for release on Friday, which could further shape the currency pair’s direction.
