- AUD/USD managed to reverse an early dip to 0.6035-30 area and refreshed session tops.
- China suspends some meat imports from Australian producers and weighed on the aussie.
- The downside remained cushioned amid a subdued USD demand, sliding US bond yields.
The AUD/USD pair managed to recover over 60 pips from daily swing lows, albeit struggled to extend the momentum and remained below the key 0.6500 psychological mark.
The pair extended the previous session's retracement slide from the 0.6560-70 supply zone and witnessed some selling during the Asian session on Tuesday. Reports that China had suspended some meat imports from Australian producers turned out to be one of the key factors that exerted some pressure on the aussie.
Meanwhile, the recent optimism over easing lockdown restrictions was overshadowed by fears about the second wave of coronavirus infections and weighed on investors' sentiment. This was evident from a weaker tone surrounding the equity markets and further undermined demand for the perceived riskier Australian dollar.
On the other hand, the US dollar was seen consolidating its recent gains to two-week amid a fresh leg down in the US Treasury bond yields and speculations that the Fed might be forced to push interest rates below zero. This, in turn, helped limit deeper losses for the AUD/USD pair, rather attract some dip-buying at lower levels.
It, however, remains to be seen if the pair is able to capitalize on the intraday uptick or continues with its struggle to sustain above 100-day SMA pivotal point. Hence, it will be prudent to wait for some strong follow-through buying beyond the mentioned barrier before positioning for any further near-term appreciating move.
Moving ahead, investors now look forward to the release of the US consumer inflation figures. This along with scheduled speeches by FOMC members might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
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