“¢ A modest USD retracement from 11-month tops helps to bounce off multi-month lows.
“¢ Sliding US bond yields/softer US economic data provides an additional boost.
“¢ Weaker commodity prices might contribute towards capping any strong gains.
The AUD/USD pair extended its steady climb from 13-month lows and has now jumped to fresh session tops, around the 0.7380-85 region.
The pair prolonged its bearish slide and was further weighed down by a strong follow-through greenback buying interest. In fact, the key US Dollar Index rose to its highest level since July 2017 and kept exerting downward pressure on the major on Thursday.
The selling bias, however, seems to have abated a bit, at least for the time being, with near-term oversold conditions prompting traders to lighten their bearish bets amid a modest retracement in the US Treasury bond yields.
The recovery move got an additional boost following the release of weaker than expected Philly Fed manufacturing index, which largely offset slight better initial weekly jobless claims.
Meanwhile, the prevalent negative trading sentiment around commodity space, especially copper, which tends to influence demand for the commodity-linked Australian Dollar, might now contribute towards capping any meaningful up-move.
Technical levels to watch
Any subsequent recovery beyond the 0.7400 handle is likely to confront resistance near the 0.7420-25 region, above which the momentum could further get extended back towards the 0.7465-70 supply zone.
On the flip side, the 0.7350-45 region now seems to protect the immediate downside, which if broken might turn the pair vulnerable to break below 2017 yearly lows support near the 0.7330 region and head towards the 0.7300 handle.
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