AUD/USD grinds higher around 0.7300, Aussie Retail Sales eyed

• AUD/USD edges higher inside the weekly range between 0.7320 and 0.7220.
• Market sentiment improves amid hopes of US stimulus, China Evergrande and covid conditions.
• Fed’s Powell is up for backing taper tantrums citing inflation, unemployment concerns.
• Australia Retail Sales may improve in August, Fedspeak, other risk catalysts also important for fresh impulse.

AUD/USD struggles to keep Monday’s rebound near 0.7300, around 0.7290 by the press time of Tuesday morning in Asia. The risk barometer pair portrays a sluggish mood in the market following an upbeat start to the week, not to forget mentioning cautious sentiment ahead of the preliminary readings of Australia Retail Sales for August.

The break to the latest AUD/USD recovery could also have taken clues from the prepared remarks of Fed Chair Jerome Powell’s testimony, up for publishing on Tuesday (the US time). Fed Chair Powell cited inflation and employment concerns while saying, “We would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal."

Furthermore, chatters that the Shenzen government is investigating the wealth management unit of Evergrande and urged to repay investors seem to challenge the risk appetite and to the Aussie pair.

Additionally, the US Dollar Index (DXY) also benefited from the firmer Treasury yields, underpinned by the Fed tapering concerns, as well as upbeat US Durable Goods Orders for August, 1.8% versus 0.7% forecast, to add to the upside filters for the AUD/USD.

Having witnessed a roller-coaster week filled with the Fed tapering and China’s Evergrande, traders were easy, mostly positive, on Monday amid receding fears of over the Beijing-based real estate firm. Also supporting the mood could be the headlines suggesting easing covid woes as well as market optimism that the economic recovery is gaining traction.

People’s Bank of China (PBOC) indirectly hints at supporting the real-estate firm while supporting to keep liquidity reasonably ample. On the other hand, New South Wales Premier Gladys Berejiklian saw October 11 as the start of easing lockdown restrictions while the final stage of reopening is scheduled for December 01.

Amid these plays, Wall Street benchmarks closed in the green while the US 10-year Treasury yields refreshed a three-month high by piercing a 1.50% level, closing around 1.49% with three basis points of an upside.

Moving on, AUD/USD traders will need to pay close attention to the preliminary readings of Australia’s Retail Sales for August, expected -2.5% versus -2.7%. Should the Aussie data disappoint, the latest weakness in the quote and fading sentiment may join challenging technicals to recall the sellers.

Technical analysis

Bearish divergence and 200-DMA challenges the AUD/USD buyers inside the 100-pip range between 0.7320 and 0.7220.

In addition to the 200-DMA level surrounding the 0.7300 threshold, an eight-day-old descending resistance line at 0.7305 adds to the upside filters before propelling the quote towards the 0.7320 hurdle.

Should the quote manages to defy the RSI divergence and crosses the 0.7320 resistance, September 10 top surrounding 0.7410 and the monthly peak near 0.7480 will be in focus.

On the contrary, pullback moves will be restricted by the stated range’s support near 0.7220.

Also likely to challenge the AUD/USD bears will be the 0.7200 round figure and 0.7150 support level ahead of August month’s low, also the yearly bottom surrounding 0.7105.

AUD/USD: Four-hour chart

Trend: Pullback expected