- AUD/USD caught some fresh bids on Wednesday amid a subdued USD demand.
- COVID-19 jitters weighed on investors’ sentiment and capped gains for the pair.
- Traders also seemed reluctant ahead of the key FOMC policy meeting minutes.
The AUD/USD pair maintained its bid tone and held steady above the 0.7500 psychological mark through the first half of the European session, albeit lacked any strong follow-through.
Following the previous day's sharp pullback of nearly 120 pips from the vicinity of the 0.7600 mark, the AUD/USD pair managed to gain some positive traction on Wednesday amid a subdued US dollar demand. Expectations that the Fed will retain its ultra-lose policy stance for a longer period continued acting as a headwind for the USD and extended some support to the major.
The USD was further pressured by a further decline in the US Treasury bond yields, though the prevalent risk-off mood helped limit any deeper losses. Worries that the spread of the highly contagious Delta variant of the coronavirus could derail the global economic recovery continued weighing on investors sentiment. This, in turn, capped gains for the perceived riskier aussie.
Market participants also seemed reluctant, rather preferred to wait on the sidelines ahead of the release of the FOMC June meeting minutes. Given that the Fed brought forward its timetable for the first post-pandemic interest rate hike, investors will look for clues about the central bank's policy outlook. This will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the AUD/USD pair.
Technical levels to watch
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