The AUD/USD pair recovers from its lowest point since May 2020 in the midst of a little intraday USD decline. Fears of a recession have led to wagers on a hawkish Fed raising rates to a big maximum. Investors increasingly anticipate the speeches of FOMC members for opportunities in the near future.

The AUD/USD pair makes a little comeback from the Monday morning low it reached, the lowest level since May 2020, but no more purchases are made. Throughout the early European session, the pair oscillates between modest gains and losses, and it is now trading just over the psychological level of 0.6500.

The USD Index, which evaluates the performance of the dollar relative to a basket of currencies, actually surrenders its intraday gains to a brand-new two-decade high and provides some support to the AUD/USD pair. The British pound quickly recovered after a two-day wild slide thanks to speculation that the Bank of England might need to intervene to stabilize the local currency. This, along with a shift in risk sentiment, causes some profit-taking in the safe-haven dollar and helps the risk-averse Aussie.

The potential of a further escalation in the Russia-Ukraine war and mounting concerns about a deeper global economic slowdown, however, should prevent any bullish market movement. A more hawkish Federal Reserve should also restrict any significant USD corrective fall and limit the upside for the AUD/USD pair. In order to control inflation, the US central bank said last week that it will be raising interest rates significantly again in the near future.

The fundamental environment implies that the downside is where the AUD/USD pair will encounter the least amount of resistance. It is thus wise to hold off on declaring that spot prices have established a near-term bottom unless there has been significant follow-through purchasing. Traders will rely on statements by prominent FOMC members on Monday since the US has not released any pertinent economic data. This might affect the USD and give the AUD/USD pair some momentum, coupled with US bond rates and the general risk mood.