AUD/USD spikes to fresh session tops, just above mid-0.7000s but lacks follow-through

   “¢   US Q1 GDP stood at 3.2% annualized pace, surpassing the most optimistic estimates.
   “¢   Weaker price data triggers a sharp slide in the US bond yields and weigh on the USD.
   “¢   The upside remains capped amid growing speculations over an eventual RBA rate cut.

The AUD/USD pair rallied around 30-pips from the headline US GDP-led swing low and refreshed session tops, around the 0.7055 region, albeit lacked any follow-through.

The advance US GDP report estimated that the US economic growth stood at 3.2% annualized pace during the first quarter of 2019 and provided a minor lift to the US Dollar/exerted some downward pressure on the major.

The pair dipped to 0.7020 area but managed to reverse course after the price measures in the report came in much weaker than expected and dampened prospects for any hawkish shift in the FOMC’s monetary policy outlook.

The market reaction was evident from a sharp intraday slide in the US Treasury bond yields, which was seen affecting negatively on the greenback and lifted the pair to an intraday high level of 0.7053.

This coupled with the latest US-China trade optimism, further reinforced by news that Chinese President Xi Jinping would meet the US President Donald Trump in June to finalize a deal remained supportive of the bid tone surrounding the China-proxy Australian Dollar.  

It, however, remains to be seen if the pair is able to capitalize on the ongoing recovery move from near four-month lows set in the previous session or the momentum fizzles out at higher levels amid growing speculations that the RBA may cut interest rates as early as in May.

Hence, it would be prudent to wait for a strong follow-through buying before confirming that a near-term bottom has already been formed and positioning for any further recovery as the focus now shifts to next week’s key event risk – the latest FOMC monetary policy update on Wednesday.

Technical levels to watch