AUD/USD rebounds from 1-week lows, lacks follow-through

• AUD/USD finds some support amid a modest USD pullback.
• Traders look forward to Aussie jobs data for a fresh impetus.

The AUD/USD pair reversed an early dip to one-week lows and climbed to fresh session tops, around the 0.6860 region in the last hour.

As investors looked past Tuesday’s dovish sounding RBA meeting minutes, the pair stalled its recent pullback from 4-1/2 month tops – levels beyond the very important 200-day SMA – and managed to find some support near the 0.6840-35 region.

Investors are likely to stay on the sidelines

The uptick lacked any obvious catalyst and could be solely attributed to some intraday short-covering move. The US dollar trimmed a part of its early gains to the 97.00 neighbourhood and was seen as one of the key factors extending some support.

This coupled with a modest uptick in the European equity markets further benefitted perceived riskier currencies, like the Aussie, and contributed to the modest uptick of around 20 pips, though lacked any strong follow-through or bullish conviction.

Despite the latest optimism over the US-China phase one trade agreement, worries about renewed escalation of trade tensions between the world’s two largest economies should keep a lid on any runaway rally for the China-proxy Australian dollar.

Hence, traders are likely to wait for a sustained move back above the 0.6875 region before positioning for any further recovery amid absent relevant market-moving economic releases from the US and ahead of the Australian jobs report on Thursday.

Technical levels to watch