AUD/USD consolidating near the 0.7600 handle after a 3-day sell-off
|- The AUD/USD is trading sideways in a tight range as investors gauge the next directional move.
- Low Australian first-quarter inflation and falling Wall Street keep the sentiment negative on the Aussie.
The AUD/USD is trading at around 0.7607 virtually unchanged on Tuesday.
The Aussie traded sideways on Tuesday between the 0.7590 and the 0.7620 level. The AUD/USD pair sell-off seen in the last three days was mainly USD-driven. The greenback benefitted by a strong buying wave as the 10-year US Treasury yield reached levels not seen since 2014. The move higher is driven by the speculation that US inflationary pressures will keep building up.
However on Tuesday, the10-year US Treasury yield reached 3.003% before retreating towards the 2.986% region while the US Dollar Index (DXY), which measures the buck relative to a basket of currencies, displayed signs of profit-taking as the index made three attempts to break above the 91.00 psychological mark to then trade in the 90.75 region at the time of writing. Some analysts at ING Bank see the last move up in the US dollar as a short-squeeze and not the start of a new bull trend.
USD was weaker against the EUR and GBP but USD weakness was not felt as much in the AUD which has failed to generate any meaningful rebound. Overnight the inflation data for the first quarter came in at 1.90% which is still well below the 2.00% target from the Reserve Bank of Australia. The data disappointed investors and failed to give the AUD any respite from the downtrend. Additionally, the Aussie lackluster sentiment has been reinforced by falling stocks on Wall Street as the rise of US Treasury yields worried investors.
It is worthwhile to mention that on April 25, Australia and New Zealand will be celebrating ANZAC Day. The stocks markets in both countries will be closed while the foreign exchange market will remain open.
AUD/USD levels to watch
The main trend is bearish with bulls attempting a pullback. Supports are seen at 0.7550-0.7600 swing lows and at 0.7500 cyclical low. Resistances are priced in at the 0.7642 swing low and at the 0.7728 swing high.
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