AUD/USD erases recovery gains after finding resistance near 0.7700
- AUD/USD lost its traction after rising in early American session.
- US Dollar Index turned north after Wall Street opened lower.
- AUD/USD remains on track to post weekly losses.
The AUD/USD pair spent the first half of the day trading in the negative territory near 0.7650 but gained traction in the early American session with the USD losing its strength. However, the risk-averse market environment didn't allow the pair to extend its rebound and AUD/USD was last seen losing 0.22% on the day at 0.7662. On a weekly basis, AUD/USD remains on track to close in the negative territory.
The initial market reaction to US data caused the US Dollar Index (DXY) to slide to a daily low of 90.36. However, the risk-averse market environment, as reflected by sharp declines witnessed in Wall Street's main indexes, helped the DXY stage a rebound. As of writing, the index was posting small daily gains at 90.53 and the S&P 500 was plunging 1.37%.
Earlier in the day, the US Bureau of Economic Analysis reported that Personal Income in December increased by 0.6% and Personal Spending fell by 0.2%, which was better than the market expectation for a decrease of 0.4%. Additionally, the Core Personal Consumption Expenditures (PCE) Price Index rose to 1.5% on a yearly basis in December and came in higher than analysts' estimate of 1.3%.
AUD/USD technical outlook
UOB Group analysts think that AUD/USD is likely to remain under pressure in the next 1-3 weeks. "Risk has shifted quickly to the downside and AUD is likely trade with a downward bias towards 0.7560," analysts noted. "On the upside, a break of 0.7730 would indicate the downside risk has dissipated. On a shorter-term note, 0.7700 is already a strong level.”
Additional levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
