“¢ A follow-through uptick in the US bond yields continues to underpin the USD.
“¢ Cautious mood further drives flow away from perceived riskier currencies.
“¢ Fresh concerns over US-China trade talks also contributed to the selling bias.
The AUD/USD pair snapped two consecutive days of losing streak, with bears now eyeing a sustained weakness below the 0.7100 round figure mark.
The pair failed to capitalize on this week’s up-move and continued with its struggle to build on the momentum beyond mid-0.7100s, with a combination of negative factors prompting some fresh selling since the early Asian session on Wednesday.
With investors still assessing the recent inversion of 3-month and 10-year US government bond yields – indicating an impending recession in the world’s top economy, the prevalent cautious mood was seen driving flows away from perceived riskier currencies – like the Aussie.
Meanwhile, a follow-through uptick in the US Treasury bond yields continued underpinning the US Dollar demand, which coupled with renewed concerns over the US-China trade negotiations further collaborated towards denting sentiment surrounding the China-proxy Australian Dollar.
It would now be interesting to see if the pair is able to find any meaningful support at lower levels or the current pull-back marks the resumption of the prior weakening trend amid absent relevant market moving economic releases from the US.
Technical levels to watch
Immediate support is pegged near the 0.7075-70 region, which if broken now seems to pave the way for further depreciation towards challenging the key 0.70 psychological mark. On the flip side, the 0.7130 region, followed by last week’s swing high, near the 0.7170 area, might continue to cap any attempted up-move, above which the pair is likely to aim towards reclaiming the 0.7200 handle.
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