AUD/USD pulls away from 2-day high despite dismal US data

• AUD/USD loses its bullish momentum above mid-0.75s.
• Private sector employment growth in US misses expectations.
• US Dollar Index recovers modestly despite the weak data.

With the risk appetite returning to markets on Wednesday, the AUD/USD pair was able to recover all of its losses from the previous day with a 70 pip daily gain. However, after refreshing its 2-day high near 0.7560, the pair started to retrace its upside in the last hour and was last seen trading at 0.7530, where it was still up 0.35% on the day.

The monthly report published by the ADP from the United States showed that the private sector employment increased by 178K in May to miss the market expectation of 190K. Furthermore, the April data got revised down to 163K from 204K. Other data revealed that the Q1 GDP growth expectations got reduced down to 2.2% in its second estimate from 2.3% in the first estimate. Finally, a separate  report displayed that the trade deficit in April fell to $68.19 billion (vs. $71.2 billion exp.)

Despite the soft data, the US Dollar Index pulled away from its daily low of 94.20 toward 94.30. A nearly 3% increase in the 10-year US T-bond yields  amid the improved market sentiment in the early NA session seems to be the primary reason behind the USD’s recovery.

Later in the day, the Fed is going to publish its Beige Book, which provides an eagle-eye view of the economic conditions in the United States. During the Asian session on Thursday, private sector credit change, which is expected to come in at 0.4% on a monthly basis in April, will be released from Australia.

Technical levels to consider

As long as the pair closes the day above  0.7500 (May 29 low/psychological level), it could try to extend its upside. Below that level,  0.7445 (May 16 low) and 0.7410 (May 9 low) align as technical supports. On the upside, resistances could be seen at  0.7600 (psychological level/50-DMA), 0.7680 (Apr. 23 high) and 0.7730 (200-DMA).