AUD/USD rebounds from one-year low, still well offered around 0.7115-20 area


  • The risk-off impulse dragged the perceived riskier aussie to over a one-year low on Tuesday.
  • COVID-19 jitters took its toll on the global risk sentiment and triggered a selloff in equities.
  • Declining US bond yields weighed heavily on the USD and helped limit losses for the major.

The AUD/USD pair trimmed a part of its intraday losses to the lowest level since November 2020 and was last seen trading around the 0.7115 region, down 0.20% for the day.

Concerns about the potential economic fallout from the spread of a new vaccine-resistant variant – Omicron – triggered a fresh wave of the global risk-aversion trade. This was evident from a sharp fall in the equity markets, which, in turn, was seen as a key factor that drove flows away from the perceived riskier aussie. The AUD/USD pair dropped to sub-0.7100 levels, though the heavily offered tone surrounding the US dollar helped limit further losses, at least for the time being.

The latest developments surrounding the coronavirus saga now seemed to have dashed market expectations for an early policy tightening by the Fed. This, along with the global flight to safety, triggered a steep decline in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond dropped to a three-week low, back closer to the 1.45% threshold, and weighed heavily on the greenback. This, in turn, assisted the AUD/USD pair to recover around 25-30 pips.

That said, any meaningful upside still seems elusive amid a more dovish stance adopted by the Reserve Bank of Australia. Moreover, the AUD/USD pair's inability to attract buyers suggests that the near-term bearish trend witnessed over the past one month or so is still far from being over. Hence, attempted recovery moves might still be seen as a selling opportunity and run the risk of fizzling out rather quickly near the 0.7155-60 supply zone, or weekly high set in the previous day.

Market participants now look forward to the US economic docket, highlighting the release of Chicago PMI and the Conference Board's Consumer Confidence Index during the early North American session. The key focus, however, will be on Fed Chair Jerome Powell's testimony before the Senate Banking Committee. Powell's remarks will influence expectations about the Fed's next policy move and drive the USD demand, which, in turn, might produce short-term trading opportunities around the AUD/USD pair.

Technical levels to watch

AUD/USD

Overview
Today last price 0.7117
Today Daily Change -0.0014
Today Daily Change % -0.20
Today daily open 0.7131
 
Trends
Daily SMA20 0.7298
Daily SMA50 0.7339
Daily SMA100 0.734
Daily SMA200 0.7515
 
Levels
Previous Daily High 0.716
Previous Daily Low 0.7114
Previous Weekly High 0.7273
Previous Weekly Low 0.7111
Previous Monthly High 0.7557
Previous Monthly Low 0.7191
Daily Fibonacci 38.2% 0.7131
Daily Fibonacci 61.8% 0.7142
Daily Pivot Point S1 0.711
Daily Pivot Point S2 0.7088
Daily Pivot Point S3 0.7063
Daily Pivot Point R1 0.7156
Daily Pivot Point R2 0.7181
Daily Pivot Point R3 0.7203

 

 

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