- A positive mood around the equity markets extended some support to AUD/USD.
- Weaker Australian macro data, a modest pickup in the USD demand capped gains.
- The set-up favours bulls as the focus shifts to the release of FOMC meeting minutes.
The AUD/USD pair lacked any firm directional bias and oscillated in a narrow trading band through the Asian session. The pair was last seen trading around the 0.6540 region, well within the previous day’s broader trading range.
Following the overnight late pullback of around 50 pips from the highest level since March 10, the pair managed to regain some positive traction on Wednesday. The uptick was supported by improving global risk sentiment, which tends to benefit perceived riskier currencies, like the aussie.
However, weaker domestic data failed to provide any meaningful impetus to the Australian dollar and kept a lid on any strong gains for the AUD/USD pair. Data released this Wednesday showed that Australian retail sales recorded the biggest decline of 17.9% in April.
This comes amid fading optimism over a potential COVID-19 vaccine, which coupled with a modest pickup in the US dollar demand led to the pair’s modest pullback of around 20 pips. The downside, however, remained cushioned as investors now await fresh catalyst before placing any directional bets.
From a technical perspective, the pair has managed to find acceptance above 100-day SMA for the first time since January 2020 and is holding comfortably above the key 0.6500 psychological mark. The set-up supports prospects for an extension of the recent strong recovery move from multi-year lows.
Hence, any meaningful pullback towards the mentioned level might still be seen as a buying opportunity. The focus now shifts to the release of the minutes of the FOMC meeting, which might influence the USD price dynamics and provide a fresh impetus later during the US trading session.
Technical levels to watch
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