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  • AUD/USD witnessed some follow-through selling and retreated further from two-year tops.
  • Weaker-than-expected Australian GDP report was seen exerting some pressure on the aussie.
  • The upbeat market mood extended some support to the pair and help limit any further losses.

The AUD/USD pair maintained its offered tone through the early European session, albeit has managed to rebound around 20 pips from weekly lows.

The pair extended the previous day’s retracement slide from two-year tops – levels beyond the 0.7400 mark – and witnessed some follow-through selling on Wednesday. The downtick picked up pace following the release of weaker-than-expected Australian GDP report for the second quarter of 2020.

In fact, the domestic economy contracted by 7% during the April-June quarter as against consensus estimates pointing to a 6% fall. Over the past twelve months to June, the economy contracted by 6.3% versus a forecast for a 5.35% fall from the preceding quarter’s growth rate of 1.3%.

This coupled with a modest US dollar uptick exerted some additional pressure on the AUD/USD pair and contributed to the intraday slide. Tuesday’s upbeat US ISM Manufacturing PMI stemmed the recent USD bearish momentum, however, the risk-on mood helped limit the downside for the major.

The AUD/USD pair was last seen hovering near the 0.7360 region as market participants now look forward to the release of the US ADP report on private-sector employment for a fresh impetus. The data might influence the USD price dynamics and produce some short-term trading opportunities.

Meanwhile, the key focus will remain on Friday’s closely watched US monthly jobs report, popularly known as NFP. This makes it prudent to wait for some strong follow-through selling before confirming that the pair might have topped out in the near-term and positioning for any further weakness.

Technical levels to watch

 

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