• Renewed USD buying interest/rising US bond yields prompt some selling.
• Downside remains supported by Aussie jobs data/positive copper prices.
The AUD/USD pair extended its steady decline from an intraday high level of 0.7548 and momentarily dipped below the key 0.75 psychological mark in the last hour, albeit quickly recovered few pips thereafter.
With investors looking past today’s mixed Australian jobs data, some renewed US Dollar buying interest prompted some fresh selling at higher levels. The downfall accelerated further during the early NA session following the release of upbeat Philly Fed Manufacturing Index, which surpassed even the most optimistic estimates.
Adding to this, continuous rise in the US Treasury bond yields, which tends to drive flows away from higher-yielding currencies – like the Aussie, was seen as one of the other key factors weighing on the major.
The retracement slide, however, remained cushioned amid a positive trading sentiment around commodity space, especially copper, which was seen lending some support to the commodity-linked Australian Dollar.
Looking at the broader picture, the pair has been oscillating with a broader trading band over the past three weeks and hence, it would be prudent to wait for a decisive break-through the range before positioning for the pair’s next leg of directional move.
Valeria Bednarik, American Chief Analyst at FXStreet writes: “The pair holds above the 23.6% retracement of its latest decline and now trades above bearish 20 and 100 SMA in the 4 hours chart, while technical indicators neared their mid-lines, now lacking clear directional strength. The downside seems limited as long as the price holds above the mentioned Fibonacci support at around 0.7505, while to the upside a major resistance is the 38.2% retracement of the mentioned rally, at 0.7565 and where the pair topped at the beginning of the week.”