AUD/USD bounces off one-week lows, down little around 0.7370 region

The AUD/USD quickly recovered around 20 pips from one-week lows touched in the last hour and was last seen trading with only modest losses, around the 0.7370-65 region.

The pair extended the previous day's post-RBA decline from the 0.7465-70 region and continued losing ground through the early part of the European session on Wednesday. This marked the third consecutive day of a negative move and was sponsored by a combination of factors.

Investors turned risk-averse amid worries about the economic fallout from the fast-spreading Delta variant of the coronavirus. This was evident from a sharp pullback in the global equity markets, which benefitted the safe-haven US dollar and weighed on the perceived riskier aussie.

Meanwhile, expectations for an imminent Fed taper announcement in 2021 pushed the yield on the benchmark 10-year US government bond to the highest level since mid-July, around 1.385% on Tuesday. This was seen as another factor that acted as a tailwind for the greenback.

The Australian dollar was further pressured by the RBA's dovish announcement on Tuesday. The central bank moved ahead with its plan and reduced the pace of its bond-buying to A$4 billion a week, albeit decided to extend the purchase period from November 2021 to February 2022.

Apart from this, the downfall could further be attributed to some technical selling on a sustained break below the 0.7400 round-figure mark. That said, oversold RSI (14) on the 1-hour chart assisted the AUD/USD pair to find some support near the 0.7350-45 region.

There isn't any major market-moving economic data due for release from the US on Wednesday, leaving the AUD/USD pair at the mercy of the USD price dynamics. This, along with the broader market risk sentiment, should allow traders to grab some short-term opportunities around the major.

Technical levels to watch