AUD/USD prints a new five-month high above 0.6900 as the USD remains offered

• AUD/USD climbs due to traders’ speculations that the US Federal Reserve would shift dovish.
• US 10-year Treasury bond yield continues to edge lower, eyeing the 3.50% threshold and weighing on the USD.
• AUD/USD Price Analysis: A daily close above 0.6900 can exacerbate a rally to 0.7000.

The AUD/USD soars sharply above the 0.6900 figure on speculations that the US Federal Reserve (Fed) would pivot from tightening monetary conditions, so the US Dollar weakened. US Treasury yields are dropping toward the 3.50% region while global equities continue to rise. At the time of writing, the AUD/USD is trading at 0.6948, above its opening price by 1.11%.

Sentiment and traders pricing a less hawkish Fed bolstered the AUD/USD

Wall Street extends its gains on Monday, ahead of the first release of US earnings. Inflation expectations in the United States (US) revealed by a New York Fed survey showed that consumers for one-year-ahead inflation decelerated to 5% in December, on its lowest reading since July 2021. However, estimates for the three-year period were unchanged at 3%, while for a longer term, they edged 0.1% up to 2.4%.

Aside from this, the US Dollar is edging down by 0.84%, as the US Dollar Index (DXY) shows, at 103.036, weakened by investors assessing a possible Fed pivot, as shown by US Treasury bond yields pushing lower, down at 3.523%.

Earlier in the Asian session, the Australian docket featured Building Permits for November, flashing a weaker housing as permits plummeted -9.0% below estimates for a -1.0% contraction, though AUD/USD traders mainly ignored data.

Reports from China added to an upbeat sentiment,  suggesting that the country will boost the issuance of special local government bonds to a record high of CNY 3.8 trillion. Senior PBOC official Guo said growth would soon return to “normal” as policymakers support households and private companies more. Guo added that “The key to the economic recovery is to convert current total income to consumption and investment to the largest possible extent.”

AUD/USD Price Analysis: Technical outlook

Following a daily close above 0.6886 and piercing the 200-day Exponential Moving Average (EMA) at around 0.6821 exacerbated the AUD/USD rally to the current exchange rate. After seesawing around the 0.6600-0.6800 area during the last ten days, the major broke upwards, eyeing the 0.7000 mark. Oscillators like the Relative Strength Index (RSI) at 63 paint a bullish picture of the AUD/USD, while the Rate of Change (RoC) shows an increase in volatility, as the AUD/USD reclaimed 0.6900.

Therefore, the AUD/USD path of least resistance is upwards, and the key resistance levels would be the 0.7000 mark, followed by the August 26 daily high of 0.7008 and the August 12 swing high of 0.7128.