“¢ Disappointing Aussie data kept exerting some downward pressure on Wednesday.
“¢ Goodish pickup in US bond yields underpinned USD and added to the selling bias.
“¢ Technical selling now seems to accelerate the fall ahead of US economic data.
The AUD/USD pair kept losing ground through the mid-European session on Wednesday and tumbled to over two-week lows, around mid-0.7100s in the last hour.
The pair’s attempted intraday recovery quickly ran out of steam ahead of the 0.7200 handle and was being capped by the disappointing release of Aussie building approvals data.
Adding to this, a modest US Dollar rebound from lows, supported by a goodish pickup in the US Treasury bond yields, was seen as one of the key factors prompting some fresh selling over the past few hours.
Meanwhile, possibilities of some intraday trading stops being triggered below overnight/Asian session lows support near the 0.7160 area seems to have further collaborated to the pair’s latest leg of decline.
Hence, a follow-through weakness, led by some fresh technical selling, now looks a distinct possibility despite a mildly positive trading sentiment around commodity space, which tends to underpin demand for the commodity-linked Australian Dollar.
Market participants now start positioning for the US macroeconomic releases – the ADP report on private sector employment and ISM non-manufacturing PMI, which will be looked upon to grab some meaningful trading opportunities.
Technical levels to watch
A subsequent fall below the 0.7140 immediate support is likely to accelerate the slide towards the 0.7100 handle, which if broken would set the stage for a fresh leg of bearish fall for the major.
On the flip side, any meaningful recovery attempt now seems to confront strong resistance near the 0.7200 handle, above with the short-covering move could get extended towards the 0.7230-40 supply zone.
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