“¢ Struggles to build on early recovery move and failed just above 0.7400 handle.
“¢ Resurgent US bond yields help revive USD demand and prompted some fresh selling.
“¢ Weaker copper prices add to the selling pressure back closer to YTD lows.
The AUD/USD pair surrendered all of the early gains and is currently placed at the lower end of its daily trading range, around the 0.7370-75 region.
The pair extended its steady decline from levels just above the 0.7400 handle, with a goodish pickup in the US Treasury bond yields underpinning the US Dollar demand and prompting some fresh selling around the major.
The latest leg of modest decline could also be attributed to declining copper prices, which tends to dent demand for the commodity-linked Australian Dollar.
Adding to this, technical selling below a short-term ascending trend-channel formation on the 1-hourly chart could have further collaborated towards exerting some additional pressure during the early North-American session.
Looking at the broader picture, the price action over the past 24-hours could be seen as a consolidation phase, especially after the recent slump of over 300-pips and near-term oversold conditions. Hence, resumption of the prior depreciating slide, amid diverging Fed/RBA monetary policy outlook, remains a distinct possibility.
Meanwhile, today’s mixed US economic data, coming in to show a narrower-than-expected current account deficit and weaker existing home sales data did little to influence the momentum, with the USD price dynamics acting as an exclusive driver of the pair’s momentum.
Technical outlook
“The upward move seems corrective from a technical perspective, as the pair is poised to resume its decline according to the 4 hours chart, as the recovery stalled below a strongly bearish 20 SMA, while technical indicators resumed their declines after correcting extreme oversold readings,” writes Valeria Bednarik, FXStreet’s own American Chief Analyst.
She further added: “The pair bottomed Tuesday at 0.7345, the immediate support, with a break below the level favoring a continued decline toward the 0.7250 region, a strong long-term static support.”
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