AUD/USD holds gains above 0.7400 as US dollar retreats
- AUD/USD holds the higher ground above 0.7400 amid USD pullback.
- Hawkish RBA Minutes, Shanghai reopening news offset PBOC’s inaction.
- Higher yields, cautious market mood could cap the aussie’s rebound.
AUD/USD is consolidating gains above 0.7400, having staged a decent comeback on a broad-based US dollar retreat.
The US dollar index corrects sharply from two-year highs, as the greenback tracks the profit-taking slide in the USD/JPY pair after it refreshed 20-year highs at 129.40.
The aussie also cheers some encouraging news coming out of Shanghai after the officials said Wednesday that “the epidemic situation in the city has shown a downtrend in recent days.” The city is set to reopen, with some factories returning to production in closed-loop systems.
Additionally, the hawkish Reserve Bank of Australia (RBA) April meeting’s Minutes also keep the sentiment around the aussie dollar afloat. The RBA minutes showed that the central bank is prepared to begin its rate-hike cycle as early this June, as they expect inflation to increase further.
Read: RBA: Further evidence that the beginning of the rate hike cycle is close – Westpac
Earlier on, the major dipped to session lows of 0.7373 after the People’s Bank of China (PBOC) surprised markets to the downside by leaving the Loan Prime Rates (LPR) unchanged in April.
Looking ahead, the market’s perception of risk sentiment and the US dollar price action will have a significant influence on the higher-yielding aussie. The Fed’s Beige Book could likely offer fresh legs to the dollar’s rally.
AUD/USD: Technical levels to consider