“¢ Disappointing domestic data triggers the initial leg of downside.
“¢ Resurgent USD demand/slump in copper prices adds to the pressure.
“¢ Focus remains on the release of latest FOMC meeting minutes.
The AUD/USD pair maintained its heavily offered tone through the early NA session, albeit has managed to rebound few pips from session lows.
The pair extended overnight rejection slide from the 0.7600 handle, or 4-week tops, and came under some additional selling pressure following the release of disappointing Australian data. According to the official releases, Australian construction sector started the year in a low gear, with the value of total work done over the quarter growing barely by just 0.2%.
The selling pressure aggravated further on the back of resurgent US Dollar demand and global wave of risk-aversion trade, which tends to drive flows away from perceived riskier currencies – like the Aussie. This coupled with a slump in copper prices further weighed on the commodity-linked Australian Dollar and added to the already weaker sentiment surrounding the major.
The selling pressure now seems to have abated, at least for the time being, with a sharp retracement in the US Treasury bond yields lending some support to the higher-yielding currency and helping the pair hold its neck comfortably above the key 0.7500 psychological mark.
Moving ahead, today’s release of the latest FOMC meeting minutes will grab all the market attention later during the NY trading session and eventually play a key role in determining the pair’s next leg of directional move.
Technical levels to watch
Any subsequent retracement now seems to find strong support near the 0.7500 handle, which if broken might turn the pair vulnerable to head back towards retesting the 0.7450-45 support area. On the flip side, 0.7575 level now seems to have emerged as an immediate hurdle, which if cleared might now assist the pair to build on its momentum further beyond the 0.7600 handle towards its next resistance near the 0.7650 region.
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