- AUD/USD turns south after touching daily high of 0.6524.
- FOMC Chairman Powell’s remarks help USD gather strength.
- US Dollar Index rebounds to 100 during American session.
The AUD/USD pair rose to a daily high of 0.6524 during the European trading hours but lost its traction as the USD started to gather strength against its rivals. As of writing, the pair was virtually unchanged on the day at 0.6470.
DXY recovers to 100
Commenting on the policy outlook, FOMC Chairman Powell said the Fed was not considering negative interest rates and noted that all policymakers were against them. Powell further noted that the evidence on negative rates was “very mixed.” The initial market reaction triggered a fresh USD-buying wave and lifted the US Dollar Index (DXY) to 100 area.
Meanwhile, the only data from the US revealed that the annual core Producer Price Index (PPI) fell to 0.6% in April from 1.4% in March but was largely dismissed by the market participants.
Assessing Powell’s commentary, “Powell is not warming up to negative rates as he said that the bank’s view has not changed – and that all members said it was no attractive tool,” said NDDFX analyst Yohay Elam. “That is set to keep equities under pressure and the dollar up.”
In the early trading hours of the Asian session on Thursday, investors will be paying close attention to Australia’s jobs report. Experts expect the Unemployment Rate in April to jump to 8.3% from 5.2%. A higher-than-expected reading could weigh on the AUD and force the pair to push lower.
Technical levels to watch for