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  • Aussie bulls lose steam as dollar holds ground.
  • Tepid risk tone, gold weakness weigh on the spot.
  • AUD/USD tracks the moves in the S&P 500 futures.

With the US dollar clinging onto the previous gains, AUD/USD’s recovery from two-week lows of 0.7193 falters at 0.7230 heading into early European trading.

The latest retracement in the aussie can be partly attributed to the renewed weakness in gold and oil prices. Gold returns to the lower bound of the recent trading range while oil drops nearly 1% to hover below $36.50.

Meanwhile, the bulls are also hurt by the risk-off mood, which extends into the European morning, as the traders hit their desks and react to the negative news on the vaccine trials. Late Tuesday, Astra Zeneca halted its vaccine trials, citing side-effects with inflammation in the spinal cord.

The ongoing US-Sino and Australia-China tensions also exacerbate the broader market risk-aversion. Investors weigh in the US’ plans to ban cotton and tomato imports from China’s Xinxiang province over the forced labor issue.

On the Sino-Australian front, the Global Times reported, “staff from the Australian intelligence agency recently raided the residences of Chinese journalists in Australia.”

Amid negative sentiment, the higher-yielding aussie follows the moves in the S&P 500 futures. The US futures also paused its recovery and returned to the red zone around the 3330 region.

Looking ahead, the spot will remain at the mercy of the risk trends and dollar dynamics amid a lack of significant US economic releases.

AUD/USD Technical levels

The bears now look to test the round figure of 0.7200, below which the 0.7141 50-DMA could be tested. To the upside, a clearance of the 0.7230 hurdle, the daily high could open doors towards the 5-DMA barrier at 0.7250.  

AUD/USD Additional levels