AUD/USD struggles around 0.7200s daily highs amid downbeat market sentiment

• Risk-sensitive currencies edge lower in the North American session.
• Goldman Sachs expects four Fed hikes in 2022, per Reuters.
• AUD/USD is downward biased, retreated from an upslope support-trendline turned resistance.

The Australian dollar slides as the North American session begins, in a risk-off-dominated session, as portrayed by US equity futures indices, point towards a lower open. In the meantime, the AUD/USD is trading at 0.7154 at the time of writing.

Some market participants and a US Bank expects four Fed hikes in 2022

In the mid-European session, a report said that Goldman Sachs, the North American investment bank, expects four hikes to the Federal Funds Rate. Also, the bank noted that the US central bank would begin reducing its balance sheet by July of 2022, if not earlier.

That comes as the last Federal Reserve minutes said that the central bank is ready to hike rates and would also begin the Quantitative Tightening  (QT), as it scrambles to drag inflation lower from close to 7%. According to the minutes, the balance-sheet reduction would probably kick-in in tandem with the Fed first-rate hike.

Meanwhile, the market mood environment benefits the safe-haven peers, like the US dollar. The US Dollar Index, which tracks the greenback’s value against its peers, advances firmly 0.45%, sitting at 96.15.

In the bond market, the US !0-year Treasury yield, one of the barometer’s for inflation, sits at 1.806%, a tailwind for the greenback, to the detriment of the risk-sensitive Australian dollar.

At press time, the US economic docket featured Wholesale Inventories for November on a monthly basis, up some 1.4%, higher than the 1.2% estimated but short of October’s reading at 2.5%.

AUD/USD Price Forecast: Technical outlook

The AUD/USD is downward biased. The daily moving averages (DMAs) reside above the spot price, with the 50-DMA with a bearish slope. Also, the AUD/USD broke below an upslope trendline drawn in December 2021 lows in the last two trading days. 

In the overnight session, the AUD/USD daily high was around 0.7200s, testing the previous-mentioned trendline to retreat towards the 0.7150s price level amid dampening market conditions.

On the downside, the AUD/USD first support would be the January 7 daily low at 0.7130. A breach of the latter would expose the December 20, 2021, pivot low at 0.7082, followed by the December 3, 2021, cycle low at 0.6993.