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  • Bulls fail to capitalize on the early uptick amid fading US-China trade optimism.
  • Fed rate cut bets kept the USD bulls on the defensive and do little to influence.
  • Holiday-thinned liquidity might limit the downside ahead of Friday’s NFP report.

The AUD/USD pair extended its steady pullback from two-month tops and is currently placed at the lower end of its daily trading range, around the 0.7020-15 region.

After an initial uptick to mid-0.7000s – the highest level since May 7, the pair witnessed some intraday long-unwinding trade on Wednesday in what could be termed as a delayed reaction to softer Australian retail sales figures for the month of May.

Investors also seemed inclined to take some profits off the table amid fading optimism over a quick resolution to the prolonged US-China trade disputes, which remained a key factor influencing sentiment surrounding the China-proxy Australian Dollar.

Meanwhile, the recent slump in the US Treasury bond yields to more than 2-1/year lows – led by expectations that the Fed will eventually cut rates in July, kept the US Dollar bulls on the defensive, though did little to influence the price action.

However, relatively thin liquidity conditions on the back of the Independence Day holiday in the US might hold investors from placing any aggressive bets and help limit the downside ahead of Friday release of the closely watched US NFP report.

Technical levels to watch