AUD/USD: Downbeat around 0.7750 amid US dollar rebound, mixed sentiment

• AUD/USD holds lower ground following a pullback from 0.7797.
• Market sentiment stays mixed amid a lack of major catalysts, Fedspeak seems to have convinced traders of late.
• US dollar recovers from multi-day low, follows US Treasury yields.
• Aussie Private Construction Done, US Durable Goods Orders and Fed comments are crucial to watch.

AUD/USD remains on the back foot around 0.7745, having dropped the most during this week, while probing the bears on early Thursday morning in Asia. The risk-barometer pair initially jumped to the highest in a week before declining from 0.7797 on the US dollar recovery. However, neither the bulls nor the bears could keep the reins amid light trading and a lack of catalysts, keeping the quote inside a familiar range between 0.7700 and 0.7820.

Searching strong catalysts…

Wednesday turned to be just another day when global markets sought clear direction but failed. Even so, the US dollar index (DXY) managed to bounce off January lows, tracking the US 10-year Treasury yields, as market players seem to believe in the US Federal Reserve (Fed) officials’ repeated rejection of the tapering calls despite accepting a transitory jump in inflation.

Elsewhere, the US removed China’s Xiaomi from the blacklist and held talks with Russia over the Nordstorm oil pipeline, suggesting the receding tensions of late. However, the UK’s record imports from Beijing and the following statements of “not to rely much on China” by British Trade Minister Liz Truss confused traders.

It’s worth mentioning that the month-end positioning is likely an additional burden, other than the lack of directives, which recently portrays sluggish markets. Amid these plays, Wall Street benchmarks printed mild gains by the end of Wednesday’s North American trading whereas the greenback remains on the front foot by the press time.

On the data side, Aussie Westpac Leading Index came in weaker than the previous 0.45% to 0.20% but the improvement in the Construction Work Done was notable, +2.4% versus -1.5% prior and +2.2 forecast. Even so, AUD/USD couldn’t cheer the published data as sentiment was largely tracking the US dollar moves.

Moving on, Australia’s first-quarter (Q1) Private Capital Expenditure, expected 2.0% versus 3.0% previous readouts, will be watched for immediate direction. However, the key will be the US Durable Goods Orders for April, market consensus +0.7% versus 1.0% previous, as well as the Fedspeak.

Should the scheduled US data joins the league of recently weak prints and the Fed policymakers stay intact on their words, AUD/USD may have a further downside to witness.

Technical analysis

Given the AUD/USD bull’s failures to cross the 0.7800 immediate hurdle, not to forget the 0.7820 resistance, the 100-day SMA near 0.7725 and a three-week-old support line near 0.7710 can lure short-term sellers.