• Stronger US CPI print prompts some aggressive selling.
• Surging US bond yields added to the downward pressure.
The AUD/USD pair extended its retracement slide from one-week tops and tumbled to sub-0.7800 level during the early NA session, albeit quickly recovered few pips thereafter.
After failing to just ahead of the 0.7900 handle, the pair turned lower and came under some intense selling pressure following today's mixed US economic releases. Hotter-than-expected US CPI print far outweighed weaker US retail sales data and attracted some fresh US Dollar buying interest.
Meanwhile, the post-data upsurge in the US Treasury bond yields, amid hopes over reviving inflationary pressure, underpinned the USD demand and exerted some additional downward selling pressure surrounding higher-yielding currencies - like the Aussie.
The pair, however, once again seems to have found some buyers ahead of the very important 200-day SMA and has managed to rebound around 25-30 pips from session lows.
Currently trading around the 0.7800 handle, indications of a sharp fall in the US equity markets should underpin the greenback's safe-haven appeal and continue exerting some downward pressure through the NY session.
Technical levels to watch
The 200-DMA, currently near the 0.7760-55 region might continue to act as an immediate support, which if broken might turn the pair vulnerable to break below the 0.7700 handle and head towards testing 0.7660 horizontal support.
On the upside, any momentum beyond 0.7815 area (100-day SMA) now seems to confront fresh supply near the 0.7855-60 region (50-day SMA), above which the pair is likely to make a fresh attempt towards conquering the 0.7900 handle.
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