AUD/USD defends 0.7600 amid risk-off mood, US dollar comeback

AUD/USD is defending the 0.7600 mark, as the US dollar holds onto its recovery gains amid a negative close on Wall Street and a rebound in the Treasury yields across the curve.  

At the time of writing, the aussie trades flat at 0.7611, having tested the 0.7600 threshold following a sell-off that was triggered after repeated rejection near 0.7680 levels.

The risk-off market mood, in the wake of fading hopes of a sooner Fed rate hike, doubts over the strength of the US economic recovery and a renewed uptick in the Treasury yields, lifted the sentiment around the dollar at the expense of the riskier assets such as the aussie dollar.

The recovery in the Treasury yields also dulled AUD/USD’s attractiveness as an alternative higher-yielding asset. The benchmark 10-year US rates jumped nearly 1.40% to test the 1.68% level.

The FOMC March meeting’s minutes offered no new surprises, although reiterated the bank’s dovish stance on the monetary policy, in the wake of the ongoing risks of the coronavirus pandemic. The Fed minutes read: “Participants agreed that the economy remained far from the (Fed’s) longer-run goals and that the path ahead remained highly uncertain.”      

Meanwhile, markets paid little heed to the comments from US President Joe Biden on his $2.25 trillion infrastructure plan, which is likely opposed by the Republicans. US Republican Senator Mitch McConnell said that “maybe a way forward on an infrastructure bill that does not change 2017 tax cuts.”

Looking ahead, attention turns towards Thursday’s US weekly jobless claims and speech by the Fed Chair Jerome Powell at a virtual International Monetary Fund (IMF) Seminar. In the meantime, the US dollar price action and dynamics in yields will continue to play out.

AUD/USD: Technical levels to consider