AUD/USD bounces off multi-month lows, still in the red just above 0.7300 mark
- AUD/USD showed some resilience below the 0.7300 mark and trimmed a part of its intraday losses.
- The risk-on rally prompted profit-taking around the safe-haven USD and extended some support.
- COVID-19 jitters, rallying US bond yields should underpin the USD and cap the upside for the pair.
The AUD/USD pair maintained its offered tone through the first half of the European session, albeit has managed to rebound around 25-30 pips from multi-month lows touched earlier this Wednesday. The pair was last seen trading around the 0.7315-10 region, still down 0.25% for the day.
The extended lockdowns in Australia’s two most populous states of Sydney and Victoria continued acting as a headwind for the aussie, which was further pressured by disappointing macro data. This, along with a broad-based US dollar strength, exerted some follow-through pressure on the AUD/USD pair for the fifth consecutive day.
However, a combination of factors assisted the AUD/USD pair to trim a part of its intraday losses to the lowest level since November 2020. The USD witnessed some profit-taking from over three-and-half-month tops amid a follow-through rally in the equity markets, which, in turn, extended some support to the perceived riskier aussie.
That said, growing market fears about the potential economic fallout from the spread of the highly contagious Delta variant of the coronavirus should continue to underpin the safe-haven USD. Apart from this, a strong pickup in the US Treasury bond yields should act as a tailwind for the greenback and cap the upside for the AUD/USD pair.
The fundamental backdrop remains tilted in favour of bearish traders and supports prospects for an extension of the ongoing downward trajectory. Hence, any attempted recovery move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly amid absent relevant market moving economic releases from the US.
Technical levels to watch