AUD/USD find support ahead of 0.75, recovers from weekly lows as DXY retraces upside

AUD/USD touched a new weekly low at 0.7509 earlier today.
USD fails to preserve its bullish momentum at the start of the NA session.
Falling US T-bond yields weigh on the greenback.

Eren Sengezer FXStreet

After closing the first trading day of the week with small losses, the AUD/USD pair edged lower during the first half of the day on Tuesday and came within a touching distance of the 0.75 psychological level. However, the modest selling pressure witnessed on the greenback has helped the pair start recovering its losses in the early trading hours of the NA session. As of writing, the pair was trading at 0.7530, still down 30 pips, or 0.2%, on the day.

Changes in the USD valuation remains as the primary driver of the pair's price action. Following an upsurge toward the critical 95 mark, the US Dollar Index reversed its course in the last couple of hours as a 2% drop seen in the 10-year US T-bond yield hurt the greenback. The negative market sentiment forces investors to flee toward safer assets such as T-bonds and pull their yields lower. Meanwhile, Wall Street started the day on a negative note with the Dow Jones Industrial Average and the S&P 500 losing 0.25% and 0.65% respectively as of writing, reflecting the risk-off mood.

In the remainder of the session, there won't be any significant macroeconomic data releases from the United States. During the Asian session on Wednesday, the RBNZ will be publishing its Financial Stability Report, and a sharp reaction by the NZD/USD pair could affect the positively correlated AUD/USD pair as well.

Technical levels to consider

With a daily close below 0.7510/0.7500 (daily low/psychological level) area, the pair could drop to 0.7445 (May 16 low) and 0.7410 (May 9 low). On the upside, resistances align at 0.7600 (psychological level/50-DMA), 0.7680 (Apr. 23 high) and 0.7730 (200-DMA).

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.