AUD/USD retreats from 2-week tops, slides back closer to 0.7100 handle
| • Resurgent USD demand prompts some aggressive selling at higher levels.
• Deteriorating risk-appetite driving flows away from perceived riskier currencies.
• The key focus remains on the latest FOMC monetary policy meeting minutes.
The AUD/USD pair extended its intraday retracement slide from two-week tops and dropped to a fresh session low, around the 0.7120-15 region in the last hour.
After an initial uptick to 0.7160, the pair met with some aggressive supply and the latest leg of a sudden drop since the early European session could be solely attributed to resurgent US Dollar demand.
Against the backdrop of a modest uptick in the US Treasury bond yields, a slight deterioration in investors' appetite for riskier assets, as depicted by weaker tone around equity markets, benefitted the greenback's safe-haven status against its Australian counterpart.
Meanwhile, bearish traders seemed to have largely ignored a mildly positive tone around copper prices, which tend to underpin demand for commodity-linked currencies - like the Aussie but did little to lend any support and stall the ongoing downfall.
Next on tap will be the US economic docket, featuring the release of housing market data, which will be looked upon for some short-term trading impetus. The key focus, however, will be on the latest FOMC meeting minutes, which might influence rate hike expectations beyond 2018 and eventually provide some fresh directional impetus.
Technical levels to watch
Immediate support is pegged near the 0.7100 handle, below which the pair is likely to accelerate the fall towards 0.7080-75 intermediate zone en-route the 0.7050-40 strong support. On the flip side, the 0.7135-40 region now seems to act as an immediate hurdle, which if cleared might assist the pair to aim towards reclaiming the 0.7200 handle with some intermediate resistance near the 0.7175-80 region.
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