Ella 
AUD/USD attracted some bargain hunting around the 0.6400 round mark during the Asian session on Tuesday and hit a new intraday high in the final hour. Spot prices are currently trading around 0.6425, with an intraday increase of less than 0.10% and still within the familiar range of the past two weeks or so.
The U.S. dollar (USD) briefly paused after its recent rally to levels not seen since December 2022, acting as a key factor for AUD/USD to find some support. Nonetheless, a hawkish outlook from the Federal Reserve (Fed) favors USD bulls, coupled with concerns over China’s housing market crisis, which should dampen any meaningful rebound in AUD/USD. The U.S. central bank reiterated last week that interest rates will remain higher for longer and supported at least one more rate hike of 25 basis points before the end of the year.
That view was reaffirmed by comments from influential FOMC members, who said borrowing costs would need to remain elevated for an extended period to get inflation back to the 2% target. Additionally, investors are now increasingly wary of the potential impact of rising oil prices on inflation. Additionally, upcoming U.S. macro data is resilient, which will allow the Fed to stick to its hawkish stance. Meanwhile, policymakers see just two rate cuts in 2024, compared with four previously expected, which will continue to push U.S. Treasury yields higher.
In fact, the yield on the rate-sensitive two-year Treasury note jumped to a 17-year high, and the benchmark 10-year yield exceeded the 4.50% threshold for the first time since 2007. This in turn suggests that there is minimal resistance to the USD’s upside, suggesting that any recovery attempts by AUD/USD are more likely to be met with a sell-off. Now, traders are looking to U.S. economic reports – including the Conference Board’s Consumer Confidence Index, new home sales and the Richmond Manufacturing Index – to inject new impetus.
