AUD/USD sees weakness to near 0.6400 ahead of Fed Powell’s speech

• AUD/USD is likely to drop to near 0.6400 after the demolition of a less-confident pullback.
• A lower-than-expected decline in the demand for US Consumer Durables supported the DXY.
• The roadmap of hiking interest rates for the remaining 2022 will be keenly watched.

The AUD/USD pair is displaying a less-confident pullback after dropping to a fresh two-year low at 0.6414. The asset is not witnessing any signs of exhaustion in the downside bias and the pullback move will be crushed sooner by the market participants. The pair is expected to decline further towards the round-level support of 0.6400 ahead of the speech from Federal Reserve (Fed) chair Jerome Powell.

Fed Powell’s speech is expected to remain extremely hawkish in order to fulfill its primary objective of crushing the price rise index and retrieve it to the desired level of 2%. What’s interesting will be the guidance on interest rates for the remaining 2022. The Fed sees interest rates to top at 4.6% from the current level of 3-3.25%. Bigger rate hike announcements in the remaining year will decline the margin for achieving the targeted rates and the world economy will see a slowdown in the pace of rate hikes later.

Apart from that, the US dollar index (DXY) is performing firmer on a lower-than-expected decline in the US Durable Goods Orders data. The decline in demand for Durable Goods landed at 0.2%, lower than the expectations of a decline of 0.4%. As the Fed is sticking to its path of hiking interest rates, a decline in demand for consumer durables cannot be ruled out. So a lower-than-expected reading cheered the DXY investors.

On the Australian front, investors are looking forward to the monthly Retail Sales data, which is expected to improve by 0.4% against the prior release of 1.3%. It seems that the retail demand is still in an increasing mode but is accelerating at a decreasing rate. A higher-than-expected Retail Demand will support the aussie bulls.