AUD/USD recovers above 0.70 following dip to multi-month lows

• AUD/USD rebounds from lows as greenback loses traction.
• Durable goods orders data from the U.S. beat expectations.  
• US Dollar Index retreats toward the 98 handle.

The AUD/USD pair extended its slide today and touched its lowest level since the flash crash witnessed on January second at 0.6988. However, with the greenback’s rally losing some steam in the last couple of hours, the pair recovered above the critical 0.70 mark and was last seen trading at 0.7010, erasing 0.07% on the day.

Since the start of the week, the pair has lost more than 150 pips pressured by the broad-based USD strength and the selling pressure surrounding the AUD following the disappointing inflation data releases from Australia, which revived expectations of the RBA going for a rate cut in May or June. Consequently, today’s rebound seems to be a technical response to the pair’s sharp drop.

Previewing the RBA meeting, “the RBA generally doesn’t fuss too much with appearances once it changes its mind, so a cut at its next policy meeting as soon as 7 May is likely, even though it would come only weeks before the Federal election on 18 May,”    Amplifying Global FX Capital analysts said. “One cut is unlikely to be viewed as significant enough to make a material difference on the inflation outlook, so a second cut is likely before the dust has had time to settle on the first, so within the next Month (4 June) or two (2 July).”

Meanwhile, the US Dollar Index surged to a fresh 2019 peak at 98.32 on the back of the upbeat durable goods orders data from the U.S. but struggled to push higher amid overbought conditions. At the moment, the index is up 0.07% on the day at 98.12.

In the early trading hours of the Asian session on Friday, import price index, export price index, and producer price index (PPI) from Australia will be looked uÄŸpon for fresh impetus. More importantly, the U.S. Bureau of Economic Analysis will publish the second estimate of the first quarter GDP growth.

Technical levels to consider