AUD/USD flirts with session lows, around 0.7725-20 area amid notable USD demand

The AUD/USD pair maintained its offered tone through the mid-European session and was last seen trading near the lower boundary of its daily range, around the 0.7725-20 region.

The pair cane under some renewed selling pressure on the last trading day of the week and has now erased the previous session's positive move to three-week tops, around the 0.7770 region. The US dollar was back in demand amid a softer risk tone across the equity markets. This, in turn, was seen as a key factor that weighed on the perceived riskier Australian dollar.

That said, doubts about the US economic recovery and indications that the Fed will keep interest rates near-zero levels for a long time might hold investors from placing aggressive USD bullish bets. This, along with a modest pullback in the US Treasury bond yields, might cap any meaningful upside for the greenback and help limit any deeper losses for the AUD/USD pair.

Even from a technical perspective, the aussie, so far, has managed to hold its neck above a one-month-old descending trend-line resistance breakpoint. This makes it prudent to wait for some strong follow-through selling before confirming that the recent bounce might have already run out of the steam and positioning for any further near-term depreciating move.

Market participants now look forward to the US economic docket, highlighting the release of the Michigan Consumer Sentiment Index for February. Apart from this, the broader market risk sentiment and the US bond yields might influence the USD price dynamics. This should assist traders to grab some short-term trading opportunities around the AUD/USD pair.

Technical levels to watch