Title: AUD/USD struggles to gain any meaningful traction, remains below 0.6800 amid stronger USD

Jul 14,2022 03:46 AM ET

By: AnalysisWatch

The AUD/USD pair struggled to build on Wednesday's modest rebound and oscillated between tepid gains and small losses during the early part of the European session. The pair was last in neutral territory around the 0.6765-0.6770 area and remains at the mercy of the US dollar price dynamics.

The Australian dollar rallied after the release of the national employment report, which showed that the unemployment rate fell to the lowest level in almost 50 years. The data strengthened the case for an interest rate hike by the Reserve Bank of Australia (RBA) at its upcoming August policy meeting.

However, the intraday rally lacked bullish conviction amid the emergence of fresh US dollar buying.

Indeed, the dollar index rose to a new 20-year high and continued to receive support from the prospect of more aggressive Fed policy tightening. The Fed's consumer inflation numbers, released Wednesday, bolstered bets on another big interest rate hike. In addition, Atlanta Fed President Raphael Bostic said everything is on the line to combat inflationary pressures that continue to rise.

Even from a technical standpoint, AUD/USD, so far, has struggled to capitalize on its rebound from near the 0.6700 mark, the lowest level since June 2020. Moreover, the recent leg lower has occurred along a descending channel, pointing to a well-established near-term downtrend. This makes it prudent to wait for strong follow-through buying before positioning for any significant recovery moves.