Having posted a session high near 0.7445 region, the AUD/USD pair ran through fresh offers and has now dropped back to the 0.7400 handle.
The pair snapped five consecutive days of winning streak and remained well-offered through early European session, reversing all of its gains posted in the previous session. The latest leg of sharp downslide could be attributed to a modest greenback recovery. In fact, the key US Dollar Index has managed to bounce off multi-month lows, back to the 98.00 handle, despite of fresh political jitters from the US.
Meanwhile, traders seemed to have largely ignored the ongoing slump in the US treasury bond yields, which typically tends to support higher-yielding currencies – like the Aussie. Moreover, a mildly cautious sentiment around commodity space also did little to extend any immediate support to the commodity-linked currencies and stall the pair’s sharp fall in the past hour or so.
In absence of any market moving economic releases, broader market risk sentiment and the USD price-dynamics would continue to be key determinant of the pair’s movement on Wednesday.
Technical levels to watch
On a sustained break below the 0.7400 handle, leading to a subsequent drop below 0.7385 support, the pair is likely to accelerate the slide back towards 0.7345-40 important support. Meanwhile on the upside, 0.7445 level now seems to have emerged as immediate strong hurdle, above which a fresh bout of short-covering could lift the pair back towards the key 0.75 psychological mark.