- AUD/USD witnessed an intraday turnaround from the vicinity of the 0.7800 mark.
- A solid USD rebound from multi-month lows prompted some selling around the pair.
- Dovish Fed expectations, risk-on mood might cap the safe-haven USD and limit losses.
The AUD/USD pair surrendered its intraday gains to one-week tops and dropped to the lower end of its daily trading range, around mid-0.7700s during the early North American session.
The pair built on this week’s goodish rebound from the vicinity of the 0.7700 mark and gained strong positive traction during the early part of the trading action on Wednesday. Bulls, however, struggled to capitalize on the move, instead faced rejection near the 0.7800 mark amid a solid pickup in the US dollar demand.
In the absence of any fresh fundamental catalyst, a strong USD rebound from the lowest level since January could be solely attributed to some short-covering move. That said, expectations that the Fed will retain its ultra-lose monetary policy stance for a longer period might hold the USD bulls from placing aggressive bets.
Various FOMC officials eased worries about runaway inflation and reiterated that any spike in prices would be temporary. This, in turn, forced investors to scale down their bets for an earlier than anticipated lift-off. Apart from this, a generally positive risk tone might also act as a headwind for the safe-haven greenback.
There isn’t any major market-moving economic data due for release from the US on Wednesday. Hence, traders might take cues from a scheduled speech from the Fed Vice Chair Randal Quarles. Any relevant comments over inflation, potential tapering and the Fed’s monetary policy outlook will produce some trading opportunities around the AUD/USD pair.
Technical levels to watch
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