AUD/USD retreats from over 1-month tops, once again fails near 0.7815-20 hurdle

  • AUD/USD struggled to capitalize on its early uptick to the highest level since March 18.
  • A goodish pickup in the US bond yields eased the USD bearish pressure and capped gains.
  • Investors now look forward to the release of the Advance US Q1 GDP for a fresh impetus.

The AUD/USD pair retreated around 30-35 pips from over one-month tops and was last seen hovering near the lower end of its daily trading range, just below the 0.7800 mark.

The pair built on the previous day’s post-FOMC positive move and gained some follow-through traction during the Asian session on Thursday. The US dollar tumbled to over two-month lows in reaction to the Fed’s dovish message, which, in turn, was seen as a key factor that provided a modest lift to the AUD/USD pair.

It is worth recalling that the Fed on Wednesday refrained from giving any hint about QE tapering and the Fed Chair Jerome Powell vowed to look through any transitory spikes in inflation. Powell reiterated that substantial further progress is needed before talking about rolling back emergency support for the economy.

This comes amid the underlying bullish tone in the financial markets, which drove some additional flows towards the perceived riskier aussie. The momentum pushed the AUD/USD pair to the highest level since March 18, though bulls struggled to capitalize on the move and once again failed near the 0.7815-20 resistance zone.

As investors digested the FOMC decision, a goodish pickup in the US Treasury bond yields extended some support to the greenback and kept a lid on any strong gains for the AUD/USD pair. Despite the Fed’s reassurance to maintain the current accommodative policy stance, rising inflation expectations acted as a tailwind for the US bond yields.

The market focus now shifts to the release of the Advance US Q1 GDP report, due later during the early North American session. The world’s largest economy is expected to have expanded by a robust 6.5% annualized pace during the January-March period. A strong reading might underpin the USD and exert some pressure on the AUD/USD pair.

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