Brocker.Org: AUD/USD bounces off 4-month lows, Fedspeaks awaited


Having tumbled to its lowest level since Jan. 9, the AUD/USD pair has managed to bounce off few pips and move back above mid-0.7300s.

The recovery has been led by a modest rebound in copper prices, which prompted traders to lighten their bearish bets around commodity-linked currencies, including the Australian Dollar.

   •  Commodities: Prices have fallen, but should we be worried? – HSBC

Despite of the pull-back, the pair held in negative territory for the second consecutive session against the backdrop of today’s weaker Australian retail sales data for March. 

   •  AUD: Weaker following disappointing retail sales data – BBH

Moreover, the pair has also been weighed down by persistent US Dollar buying interest, driven by growing prospects for an eventual Fed rate-hike action in June. 

Hence, it remains to be seen if the bounce is backed by any genuine buying or is solely driven by short-covering amid ongoing up-move in the US treasury bond yields, which tends to drive flows away from higher-yielding currencies – like the Aussie. 

Next on tap would be the release of JOLTS job opening data from the US, while key focus would be on speeches by Boston Fed President Eric Rosengren and Dallas Fed President Robert Steven Kaplan.

Technical levels to watch

Any further recovery move is likely to confront resistance near 0.7375-80 region, above which a fresh bout of short-covering has the potential to lift the pair beyond the 0.7400 handle towards testing its next hurdle near 0.7425-30 band.

On the flip side, 0.7335-30 area now becomes immediate support to defend, which if broken is likely to accelerate the slide towards the 0.7300 handle before the pair eventually drops to test its next support near 0.7285-80 horizontal level.